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TurboTax Uses Dark Patterns To Trick You Into Paying To File Your Taxes (propublica.org) 263

ProPublica reports on the shady tactics TurboTax and other tax software companies use to prevent most Americans from filing their taxes for free. According to an agreement with the IRS, tax software companies are supposed to offer a "Free File" product to Americans making less than $66,000 a year. From the report: Here's what happened when we went looking. Our first stop was Google. We searched for "irs free file taxes." And we thought we found what we were looking for: Ads from TurboTax and others directing us to free products. The first link looked promising. It contained the word "free" five times! We clicked and were relieved to see that filing for free was guaranteed. We started the process by creating the profile of a TaskRabbit house cleaner who took in $29,000. We entered extensive personal information. TurboTax asked us to click through more than a dozen questions and prompts about our finances. After all of that, only then did we get the bad news: TurboTax revealed this wasn't going to be free at all. Turns out the house cleaner didn't qualify because he is a independent contractor. The charge? $119.99.

Then we tried with a second scenario. We went back to TurboTax.com and clicked on "FREE Guaranteed." This time, we went through the process as a Walgreens cashier without health insurance, entering personal information and giving the company lots of sensitive data. Again, TurboTax told us we had to pay -- this time because there's an extra form if you don't have insurance. The charge? $59.99. But wait. Are the house cleaner and the cashier not allowed to prepare and file their taxes for free because of their particular tax situations? No! According to the agreement between the IRS and the companies, anyone who makes less than $66,000 can prepare and file their taxes for free.
After doing some digging in the source code, ProPublica found that TurboTax had branded them as "Non Free File Alliance" or NONFFA.

"Even though TurboTax could tell we were eligible to file for free, the company never told us about the truly free version. It turns out that if you start the process from TurboTax.com, it's impossible to find the truly free version. The company itself admits this."

Another Google search brought them to a page with two options: "See If You Qualify" and "Start for Free." The "Start for Free" link brought them back to the version of TurboTax where they had to pay, but the "See If You Quality" link finally took them to the real Free File program.
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TurboTax Uses Dark Patterns To Trick You Into Paying To File Your Taxes

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  • by phantomfive ( 622387 ) on Monday April 22, 2019 @05:45PM (#58473888) Journal
    It should be mentioned that for most people, the real problem is that they have to use these things at all, when the IRS already knows all the info.
    • by DewDude ( 537374 ) on Monday April 22, 2019 @05:49PM (#58473920) Homepage
      Yup; and companies like Intuit and H&R Block are lobbying to make sure the government can't do it for you. Probably support more complicated and ambigious tax code so more people are forced to use their services.
      • by fahrbot-bot ( 874524 ) on Monday April 22, 2019 @06:11PM (#58474080)

        Yup; and companies like Intuit and H&R Block are lobbying to make sure the government can't do it for you. Probably support more complicated and ambiguous tax code so more people are forced to use their services.

        And here's an article about that: Bill Would Ban IRS From Creating Free Electronic Tax Filing System [npr.org]

        If you want to file online, you typically have to go through a private company like H&R Block or Intuit, the makers of TurboTax.

        Why do you have to use them? Well, an agreement with the IRS and private tax prep companies prevents Americans from filing directly online with the IRS. And that rule could become permanent. Lawmakers on both sides of the aisle are trying to pass the so-called Taxpayer First Act, which would permanently bar the IRS from creating a free electronic tax filing system.

        Not really sure how this puts the "taxpayer first" ... seems like it puts the companies first. Normally, I'd bitch about Republicans skullduggery, as this seems right up their alley, but -- as noted in the article -- this has bi-partisan support, possibly for other reasons..

        MARTIN: So is it safe to assume that there was just a lot of lobbying on the part of companies that get paid when consumers come in and say - these are too complicated for me to do. Can you do them?

        ELLIOTT: Yeah. I mean, just H&R Block and Intuit - those are the two biggest - together, they spent over $6 million dollars lobbying on issues, including this one, last year - had been pushing for this to make it into law for many years now. And the current bill contains a lot of other provisions, including some that are supported by consumer advocates. And I think that's one of the reasons it's now getting bipartisan support and might make it into law.

        • Not really sure how this puts the "taxpayer first" ... seems like it puts the companies first.

          Just as with ballot measures at the sate and local level, the title and summary (along with any ballot arguments) are NOT the law, may have nothing to do with it, or may be outright lies.

          They're a salesman's puffery, to try to attract votes (or extort them from representatives by giving them choices like voting for genocide or against something that sounds like a must-support-or-you're-a-tyrant bill).

          One example:

          • A bill to create or raise a tax might create a fund earmarked for some purpose, or set of purposes. But right at then end they tack on "or any other legal purpose."

            Or the first bill into the hopper the following session amends the law to allow some other purpose.

            We got a wonderful tax on our water bill, of all things, specifically to pay for fixing two specific streets that the contractor had screwed up ten years ago. Those streets are now fixed. And the tax is still on the water bill because it was such a great, easy way for the city to get money. It was joined by more taxes that pay to trim trees on private property, fix sidewalks that the homeowners used to be res

    • by Tablizer ( 95088 ) on Monday April 22, 2019 @06:10PM (#58474068) Journal

      Agreed. Lobbyist bribery worked. The IRS can generate a default filing profile, and citizens could accept it by letting it be, or simply signing off a pre-generated form. One only explicitly files if they want special deductions.

      In many cases the deductions could be submitted by themselves rather than have to generate the whole kit and caboodle.

      The American people have been had. I hope one of the presidential candidates takes this up as a cause.

      • by Anonymous Coward on Monday April 22, 2019 @06:28PM (#58474156)

        File on paper. It's free and the instructions have many more helpful facts about credits and deductions. I have never had an online service save me more money then just following the instructions from the IRS and state. Of course you have to be patient and read intelligently, but if you've gone through it all once, hopefully it's a heck of a lot easier in future years. The great thing about the IRS is they have nothing to sell you, so they are as honest as the day is long.

    • by Shaitan ( 22585 )

      I've actually had to set the IRS straight a few times, in fact EVERY time they've assessed my taxes they've been incorrect and always in the wrong direction.

      The IRS has an explicit bias of collecting the most tax they can from you not the least. You have an interest in a different direction. The codes are set up so that there are multiple correct answers, the IRS would pick the most desirable to maximize tax revenue whereas you pick the least desirable.

      There are also some things they never know, like whethe

      • by meglon ( 1001833 )

        The IRS has an explicit bias of collecting the most tax they can from you not the least.

        No. The only bias they have is collecting what you owe, not more, not less. You may not like the amount you owe, that doesn't mean you don't owe it.

        • by Shaitan ( 22585 ) on Monday April 22, 2019 @10:17PM (#58475124)

          This is false. I repeat, THERE ARE MULTIPLE CORRECT ANSWERS when filing your taxes, there are options. There is not a fixed correct amount you owe. Tax software is designed to try to find what you the filer consider the correct answer, the selection of legal and valid choices which results in the lowest tax burden. The IRS selects the schedules and tables which results in the highest tax burden.

          The IRS by default won't give you valid deductions and credits you qualify for, where there is more than one accounting method that can applied they choose the one giving the highest tax due. If there is an unknown value the default IRS assessment defaults to the worst case from you. Fail to specify HSA deductions, the IRS doesn't go by past history, nope they assume NONE of your HSA expenditures were qualified. In all cases the benefit goes against you if left to the IRS and the burden is on you to prove otherwise. They wouldn't even choose the best of your options in terms of filing status.

          Don't even get me started on their collection processes, the way they force people to incur additional tax debt by force liquidings tax deferred accounts, tell people their expenses don't count on assessments for payment plans, fail to tell people when they qualify to have tax debt discharged due to inability to pay or the debt having run statute.

          Here is something fun for you. Do your taxes by hand, then use two or three of these free filing options. All three are trying to give you the maximum refund you qualify for (which is the only sane definition of having correctly assessed what you owe). They will all give different answers and all followed the rules.

          • by meglon ( 1001833 ) on Monday April 22, 2019 @11:01PM (#58475258)
            I've done my taxes by hand since 1981. I have probably had the IRS inform me of discrepancies maybe 5-6 times during that time, the last being2 years ago. Every time, except the last time, those discrepancies netted me an additional amount to my refund. The last time my forms were correct, but for some reason i wrote my check for amount due for $6 less than it was supposed to be. The IRS has gone out of it's way to give me more (not usually a lot, but a little) back than i thought i was due. At least two of those times were deductions/credits i didn't even know about.

            Now, IF YOU SCREW UP and can't do basic math, or can't find a calculator, spreadsheet or anything that can do basic math, your mileage may vary.
    • IRS doesn't know my itemized deductions.
  • by b0s0z0ku ( 752509 ) on Monday April 22, 2019 @05:48PM (#58473916)

    You don't need to play 250 questions with crapware like TurboTax. Just go to Free File Fillable Forms and fill in the tax forms yourself. Basically like the PDF forms except that they're filed online with basic math done for you, and it's free for all income levels (the IRS only recommends it above $66k/yr, but it's fine to use even below that income).

    https://www.freefilefillablefo... [freefilefi...eforms.com]

  • freetaxusa (Score:4, Informative)

    by avandesande ( 143899 ) on Monday April 22, 2019 @05:50PM (#58473930) Journal
    I've used them for years, federal is free and 15$ for state
    • by crow ( 16139 )

      Yes, I've used that. They make you fill out all the state tax information before you can file the federal taxes, so I expect most people do pay. I just took my state information to the freefillableforms site and filed them there, but it was rejected with obscure error messages until I figured out what was wrong on one of the schedules after several tries. In the past, I've filed my state taxes with paper. I refuse to pay someone to file electronically.

      • I use freefillableforms.com - of course, being old enough to have submitted on paper, back in the day, makes that pretty simple. It might be slightly harder for a young person with math anxiety.

  • Bring back telefile, and please remove yourself from my lawn.
  • TurboTax, here in Canada, is nowhere nearly as misbehaving as it seems they are in USA. Sheesh. You know Congress is in the pocket when TurboTax is brazen enough to charge $119 to allow you to file "for free".
  • by redback ( 15527 ) on Monday April 22, 2019 @06:08PM (#58474048)

    The Australian Tax Office produced their own tax return software. The current version is just a website. Dead easy to file if you are just a normal worker and dont have any weird shit going on.

    • by b0s0z0ku ( 752509 ) on Monday April 22, 2019 @06:16PM (#58474102)
      The US government is legally forbidden from doing this. The accountants' and tax software companies lobbies be strong.
    • Re: (Score:3, Informative)

      Sounds great, but this is the USA and nothing gets done unless does one or more of the following:

      1) Increase profits for a corporation
      2) Increase the wealth of the 1%.
      3) Disenfranchise anyone who wants to change the current system.

  • A related problem (Score:4, Interesting)

    by swillden ( 191260 ) <shawn-ds@willden.org> on Monday April 22, 2019 @06:11PM (#58474072) Journal

    Even when you purchase TurboTax, which allows you to e-file your federal taxes for free (after paying for the software), they charge you for e-filing your state taxes. Fine, whatever, so e-file your federal taxes and print and mail your state taxes, right? Except they've made it harder and harder to find the path through the software that allows you to print your state taxes for filing while e-filing the federal taxes. It's possible, and I've always managed to find it, but it seems to take more effort every year.

    • I switched from TurboTax to Tax Cut (since renamed to H&R Block At Home -- I guess they want you to use H&R Block With A Their Tax Preparer at Their Office) during the "root kit" imbroglio over the TurboTax copy protection scheme.

      I am OK with it, but it has "corner cases." One of them is that it wouldn't e-file my state because I owed too much money on the state return -- it just threw up its hands like an Airbus with a frozen pitot tube.

      I e-filed the state (for free!) by entering the softwar

      • At no point this year did hrblock.com ask me for money at all. Just click through their link on https://apps.irs.gov/app/freeF... [irs.gov] and off you go. I used to pay a small fee every year when using it, which gave some perks like autofilling in data from previous years and keeping your tax information on file for whateverx years, extra guarantees on accuracy and a bunch of other things. That was all free this year
    • I must differ on that. I've filed online with TurboTax every fiscal year from 2006-2018 (i.e., up to this month) and I've never paid a fee to file my state taxes. This is in NY state.

      • NY Law prohibits tax software from charging a filing fee for NY State returns above and beyond the cost of the software.
  • Doesn't appear to describe how much compensation the IRS gives to participating preparation providers but does have all the terms of service.

    Free File (Eighth) Memorandum of Understanding - 2018 [irs.gov]
  • by Anonymous Coward

    You have to file a return (usually). You don't have to give all your private and financial info, SSN, etc, to a for-profit company that you otherwise have no connection to or any other reason to associate with. Download the PDF forms, read the manuals, fill them in, print them out, use this old thing called the postal service, and stop paying these parasites. Consider it a protest if you like - keep inundating the IRS with snail mail until they relent and let you submit the damn things electronically no

  • I used to use Turbo Tax until a few years ago when they botched my state return and failed to get a carryover tax credit credited to me correctly. I ended up getting it months later by filing an amended return that I did myself without Turbo Tax's "help". Then I switched to H&R Block's software and been using them since. The prices quoted to file are absolutely absurd. It's possible to get both Turbo Tax and H&R Block software for about $30 if you buy from Amazon at the right time. Both come wi
    • I've filed electronically with TurboTax from fiscal 2006-2018 (i.e., this month) and never paid an extra fee for the state filing.

  • Our first stop was Google.

    Yeah, maybe you should have gone to https://www.irs.gov/ [irs.gov] instead, and followed the link on the home page to "File your taxes for free."

  • by C0L0PH0N ( 613595 ) on Monday April 22, 2019 @07:03PM (#58474330)
    I used to work for an income tax preparation software company, and learned a few things. Tax prep companies are required by law to provide free filing, but they hate it and as with TurboTax, are sneaky. I have used the free version of TurboTax for years, very happy with it. Here is how to do it. Go directly to IRS.GOV. Click on the link that says "File Your Taxes For Free". This link disappears when it is not tax season, and reappears the next tax season. All of the free tax preparation providers, including TurboTax, are listed here. These are all guaranteed to be the free versions. Don't go directly to TurboTax.com, as the post recommends. If you go there, it will be virtually impossible to find the free version. But again, all the truly free versions are definitely available on IRS.GOV during tax season.
  • Comment removed (Score:5, Informative)

    by account_deleted ( 4530225 ) on Monday April 22, 2019 @07:38PM (#58474512)
    Comment removed based on user account deletion
    • by sad_ ( 7868 )

      As in most civilized places on earth, in Belgium this is also the case.

  • ...and I'm in roughly the top 5% of households. My taxes are really simple, though.
  • Why do tax software companies need to provide you a free option below a certain income level? Why did they get into this agreement with the IRS?

  • When I owe money .. I print it out and mail it so it takes as long as possible for the IRS to get it.

    If one doesn't have a printer, one can usually get most forms for free, they used to have them at the post office but I think the IRS will mail them if asked. Then just copy the numbers.

    Mailing is always available for the cost of a stamp.

    Oh .. you want your refund faster?? How much is it worth to get it faster. I always buy the basic version so I have the current software on my computer at all times and ca

  • Every year, we've ended up with, "oh, you have to pay". Not knowing they were screwing me over, I did. I'm clearly entitled to free filing, therefore I was scammed and should be entitled to a refund. Unless someone is preparing to file a class action suit, in which case contact me.

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