Tax Credits To Intuit Better Spent To Fund a Free Alternative To TurboTax, Lawmakers Say (bloomberg.com) 112
Intuit is being questioned by US lawmakers who say federal tax credits the company received could have been better spent to build a free government alternative to Intuit's popular online tax preparation software, TurboTax. From a report: "For years, Intuit's corporate lobbyists have argued that the federal government should not set up a program for Americans to file their taxes online and for free because it would be too costly for taxpayers," the lawmakers, including Senators Elizabeth Warren and Bernie Sanders, wrote in a letter to the company. "Your company's disclosure reveals that Intuit's research tax break from 2022 alone could have been enough to fund a year of a free e-File program for millions of Americans."
The lawmakers asked Intuit to provide details on its research expenses dating to 2018. Warren, a Massachusetts Democrat, and Sanders, an Independent from Vermont, were joined on the letter by Senator Richard Blumenthal, a Connecticut Democrat, and Representative Katie Porter, a Democrat from California. The Internal Revenue Service, in a report to Congress last year, estimated it would cost $64 million to $249 million annually for the agency to run a free-filing program. In the fiscal year ending in July 2023, Mountain View, California-based Intuit received $106 million in federal research and experimentation credits, which amounted to about 4% of its total R&D expenses, according to a regulatory filing.
The lawmakers asked Intuit to provide details on its research expenses dating to 2018. Warren, a Massachusetts Democrat, and Sanders, an Independent from Vermont, were joined on the letter by Senator Richard Blumenthal, a Connecticut Democrat, and Representative Katie Porter, a Democrat from California. The Internal Revenue Service, in a report to Congress last year, estimated it would cost $64 million to $249 million annually for the agency to run a free-filing program. In the fiscal year ending in July 2023, Mountain View, California-based Intuit received $106 million in federal research and experimentation credits, which amounted to about 4% of its total R&D expenses, according to a regulatory filing.
Good idea, but (Score:4, Interesting)
Re:Good idea, but (Score:5, Informative)
It actually works decently well where I'm from, Denmark. Here you get your yearly calculations as our version of the IRS is aware of it, and if you have nothing to change about it - you just do nothing. It's a system that simply works.
Re: Good idea, but (Score:2)
To be fair, the US is especially good at screwing up government software by having half the government try to sabotage it, and everyone try to trim out all the âoenon essentialâ parts.
That said, weâ(TM)re pretty good at that in the UK too, and we still have a working PAYE tax system.
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That said, we're pretty good at that in the UK too, and we still have a working PAYE tax system.
Give it time, beelsebob. Give it time.
Re: Good idea, but (Score:2)
I hate the PAYE system. They canâ(TM)t get it fucking right. Iâ(TM)ve lived in the US and Canada too and would much prefer their systems where I, as the taxpayer, is in control of deductions. Trust me, Iâ(TM)ll get it right and wonâ(TM)t have an unexpected expense or be robbed of my earnings because they fucked up the PAYE code yet again.
Good example is where a few years ago, our pensions got switched at an acquisition from salary sacrifice to relief at source. Nobody explained the c
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Re:Good idea, but (Score:5, Insightful)
Re:Good idea, but (Score:5, Insightful)
Re:Good idea, but (Score:4, Interesting)
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Re:Good idea, but (Score:4, Informative)
None of those sound complicated at all though? A checkbox with a standard deduction if you are under a certain age?
If you think European taxes don't have this kind of things... of course we do. The complication from the US system is from the different tax layers (federal, state and local), where European countries also generally have those but they tend to be more neatly segmented. However at the end of the day each of those tax rules is just a simple rule that boils down to a checkbox, a couple of conditions and some deduction or addition. It's a lot of rules but it isn't all that complicated.
Like what tax rule would be complicated to implement?
Re: Good idea, but (Score:2)
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Intuit does this? I mean if they include tax evasion schemes like setting up sandwiches through ireland then yes this would be pretty complicated.
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No deductions. Just what you earned and what you pay. We can debate what earning is about, but once that's know it should be simple to calculate. Everyone pays. Higher e
Re: Good idea, but (Score:2)
We already have a progressive tax system like that. The level of granularity seems to be a bit coarser than youâ(TM)re suggesting though. Tax policy can be used to encourage behaviour though, such as reducing your total income when you spend on something beneficial like education.
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To be frank, I dont think your taxes are anywhere nearly as complicated as ours.
Maybe, but _who_ do you think lobbies for the convoluted tax laws? Who benefits from citizens feeling like taxes are "too complicated" to do without some expensive software holding their hand?
But even with the absurd deductions, credits, loopholes, and other tax nonsense, it's the IRS that is responsible for navigating, implementing, and enforcing all of these rules. They have thousands of pages of detailed explanations for how to calculate taxes already available. If anyone was in a good position to bui
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My guess is...it would not be simple to implement anything like that with the US IRS.
I'm willing to bet good money that at the IRS, there is no "one" system that does it all.
More than likely the IRS still works with a number of very old, ancient stovepipe systems that do no
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Re:Good idea, but (Score:4, Insightful)
It actually works decently well where I'm from, Denmark. Here you get your yearly calculations as our version of the IRS is aware of it, and if you have nothing to change about it - you just do nothing. It's a system that simply works.
Its seems that many other countries have similar ways of doing tax returns. Why is the US different?
Is the problem that there are so many rules and regulations that any computer tax return program must necessary be complex to handle all those rules and regulations and inherent conflicts and ambiguities? The US will never get rid of its complex tax rules and regulations. Its existence is demanded by rich people as a means to reduce their tax burden and is guaranteed by the lobbyist money directed at the Congress that both criticizes and protects that complexity.
Is the problem that the current commercial tax return companies have been too successful with lobbying Congress to keep the government out of their market? In fairness to the companies, I can see why they would do this, as the alternative means that their business disappears.
Is the problem that many Americans inherently believe that private companies will always perform better than government agencies? In fairness to Americans with this viewpoint, there are historical examples to support this viewpoint, such as SpaceX vs. NASA, FedEx vs. USPS. But in fairness to the counterpoint, many of those underperforming government agencies were directly (and arguably intentionally) hobbled by the same Congressional critics via budget cuts and rules, sometimes on a ridiculous scale. Looking at bang for the buck when comparing government agency performance for the US versus European and other countries, the performance of many of the international agencies look enticing.
Re: Good idea, but (Score:2)
Re: Denmark - also in EU, and except for folks with more complex tax sheets, like self-employed or business owners, most folks just go to govt tax site instead of through an accountant. Stuff is often filled out beforehand as it has been for over a decade, boxes to pay attention to get hilighted (say, you bought a house, got a new kid or divorced) for review, sign with the electronic ID, and be done with it. Takes 5 minutes. Not happy once the verdict comes afterwards? We got until next tax sheet to complai
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Same here, for most wage earners at the end of the tax year they get notified of the state of affairs and that's about it. Even for somewhat nonstandard earners that need a few special-snowflake add-ons the filing process is pretty much a no-brainer, fill in the appropriate bit on the tax department web site and you're done.
I suspect lots of other countries also have systems like this that just work, it's the simplest and least effort for everyone (taxpayers and IRD) involved.
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Things like this scales 1:1
If anything, it should actually scale in favor of a larger population. I don't agree with any of their point. I do, however, believe it would be harder to initially implement. However, that has nothing to do with their BS reasoning. We've just overcomplicated it all.
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Re:Good idea, but (Score:5, Interesting)
Personally, I think the IRS should simply send everyone a pre-filled out 1014 or 1014EZ every year at tax time. If the numbers match, sign it and send it back. If they don't, fix them and send it back. If you think that a CPA or a software package could do a better job, use them and send in their forms.
As I understand it, the majority of Americans just don't have very complicated taxes. There's no reason to make tax time difficult for them.
Re: Good idea, but (Score:4, Interesting)
In the UK (and most of Europe) we donâ(TM)t even do that. If your taxes are just normal income (plus a bunch of other things like buying a home) you just donâ(TM)t file your taxes. If you suspect something is wrong, or you have a more complex situation, then you fill out a tax return.
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You mean 1040?
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You mean 1040?
Yes, my fingers are faster than my brain sometimes, but not as accurate.
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Personally, I think the IRS should simply send everyone a pre-filled out 1014 or 1014EZ every year at tax time.
As long as we are giving out personal opinions, I think their shouldn't even BE an income tax on individual incomes that are less than the top 10% of earners. What even is the point? Create another consumption tax that makes up for any lost revenue if the money is that important.
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Lots of countries already do it. You've got one reply from Denmark already. In Canada the revenue agency does their calculations and you can download them, add anything they don't know about, and send it back.
If US government software sourcing is so bad, maybe you want to take a look at that.
Re:Good idea, but (Score:4, Interesting)
If US government software sourcing is so bad, maybe you want to take a look at that.
That's the crux of the argument. We don't have a "government software" for filing taxes. Why? Because we passed a law saying the government wasn't allowed to provide one. You get one guess who pushed such a law.
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The US is really a patchwork of different 'countries' like the EU has different 'country-states' as well but doesn't have a federal tax system (yet), they just take your money.
The Federal Tax system should be completely abolished, the government started out without a federal tax, the IRS was a temporary agency to fund the Civil War.
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Lots of countries are federations or have other types of subunits with varying tax laws. Canadian provinces collect income tax and they range from a simple percentage of the federal tax paid to the feds and redistributed to Quebec that has to be different and have an entirely separate system.
The US government originally didn't have any way to raise funds and it was a disaster, triggering a constitutional crisis and rewrite. You might think you want to go back to only foreign trade federal taxation, but I do
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How was it a disaster? It worked as expected, states were supposed to be more independent than they are now, the US government rented guns, boats and cannons from private entities if it needed them, which allowed private entities a lot more influences on what their 'taxes' were spent on.
At that point, the US wasn't the greatest trade empire, it only became that way after WW1 and likely would've happened regardless through private trade because Europe had killed the majority of its economy.
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The states didn't contribute, Colorado in particular said "lol, we don't have to so fuck you" and the constitution got rewritten. I realize in American history that's a grand success, but then everything is.
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Again, that was as designed. Power hungry people in central power didn't like it and rewrote the constitution. If Colorado didn't want to participate, it wouldn't have to and would've remained Colorado, with slightly less government services, now it's just a "province" of the Federal government at best.
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You can absolutely argue that the US should be a looser confederation, more similar to the EU. It has costs and benefits.
I don't think most Americans would like it.
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Maybe they should hire better people than you to write their software.
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Maybe they should hire better people than you to write their software.
Fortunately I don’t write software.
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Re:Good idea, but (Score:4, Insightful)
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They don't have "everything," and don't really want you to know what they do not know. They also think they know some things that might not be 100% correct.
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Since the IRS has all of the relevant data, why do US folks have to 'do' taxes at all?
Two forces, Grover Norquist and the American tax prep industry led by Intuit and H&R Block. Grover Norquist lobbies Congress to intentionally make paying taxes as complicated and as painful as possible so that Americans resent paying taxes and thus become more anti-tax. Meanwhile, tax prep folks want to make it complicated so that you need to pay for their services to file it. A quote from a past news article [politico.com] on this very topic:
H&R Block and Intuit want to make it difficult for you to file on your own. The anti-tax activists think that if taxpaying is too easy, voters will be less likely to resist the federal government’s growth. Both want to make it as painful as possible for you to do your taxes yourself.
Norquist isn't even shy or secretive about it - he openly talks about this p
Re: Good idea, but (Score:2)
Other countries have managed, I'm sure the world's largest economy can figure it out.
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Ultimately the problem is tax code complexity. Once you get beyond the basics that cover ~80% of individual income tax returns it can actually get complicated and more importantly, grey. If you could simplify returns for ~99% of people you might be able to make something that works easily and can be government run.
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no... (Score:2)
My concerns is bugs and errors would push filers into a mess of finger pointed and penalties while it gets sorted out.
While the first version or two may have bugs and errors, the IRS is not going to penalize those who tried to use the software and failed. In fact I would be more concerned about using 3rd party software that works incorrectly. I think the IRS would be much less forgiving about that.
Do you work for Intuit?
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My concerns is bugs and errors would push filers into a mess of finger pointed and penalties while it gets sorted out.
While the first version or two may have bugs and errors, the IRS is not going to penalize those who tried to use the software and failed. In fact I would be more concerned about using 3rd party software that works incorrectly. I think the IRS would be much less forgiving about that. Do you work for Intuit?
No
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My concerns is bugs and errors would push filers into a mess of finger pointed and penalties while it gets sorted out. TurboTax and others seem to have sorted it out and likely pay them is a better and possibly cheaper alternative.
You are presuming a difficulty, while pointing to examples of it being solved.
That is not persuasive.
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Having worked for a Baby Bell (Ameritech, '95-'97) in what was a startup division that was going to be their long-distance service, you want to trust giant corporations to do it right, every year?
great idea (Score:3)
Re: great idea (Score:2)
But the money people spend on Intitâ(TM)s software would still get spent in the economy, so the government would still earn those sales taxes. Just people would be getting something useful for their money.
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The government doesn't benefit from it being complex in itself though, that's just a symptom of using tax code to encourage or discourage things
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How do you figure?
By making it complex, people are more likely to just go the easy route - either not filing (very bad for them), filing incorrectly (also bad), or paying someone to do it (in which case it might be done wrong). In all those cases, it's good for the government: the IRS can audit people (and do audit people, primarily poor people who can't do shit about it but pay the difference).
I've personally been audited twice. In one case it was a mistake by the IRS, and in the other it was my employer.
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That's not the goal for the government. It costs the IRS money to audit people, it's much easier for them if they just get the money they need
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Just buy them... (Score:2)
Why doesn't the federal government just buy Intuit? From what we spend on the IRS, I'm sure a deal could be reached that would be hard to turn down.
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Why doesn't the federal government just buy Intuit? From what we spend on the IRS, I'm sure a deal could be reached that would be hard to turn down.
This is my thought every time it comes up. Intuit can't be worth more than our government is willing to sneeze accidentally in a single day. Toss 'em a few bills an let 'em ride off into the sunset. Isn't that the dream of all software companies? To be bought out by a larger entity?
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The issue is that Intuit adds more value than just filing of the taxes. They collect plenty of PII data that they sell which the government is not interested in but would have to pay for it. Building the tax filing software platform isn't difficult and it's not the value of Intuit, it's the market share. The governments version of the software can gain the market share with little troubles. There is no reason that it has to pay for it.
Except for one minor little detail: Every time our government attempts to spin up a new form of software to help the general population, it comes across like they hired random people off the street that may have answered "do you know what a computer is\' with 'yes' or 'maybe' but really had no other qualifications for software development or testing. That's why buying something may be a better option. I'd hate to see tax-time if they botched it as horribly as the original ACA site. Oi.
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I'm pretty sure that is illegal for the US Federal Govt. to do....
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IRS Already Has a System (Score:3)
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Why not just expand that system
Intuit's "lobbying" money is pretty much the reason "why not". (Not isolated to just Intuit, there are plenty of established players paying to keep the government from eating their lunch.)
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That's starting soon. Currently in trials: https://www.cbsnews.com/news/i... [cbsnews.com]
Complexity breeds jobs (Score:4, Interesting)
We'd put 10s of thousands of accountants, auditors, and IRS agents out of business if we fixed this thing called a tax code. Instead of
We try to find some technical solution to the issue that becomes another set of logic driven by rules sometimes in conflict.
Wasn't Intuit sued for deceptive practices over their "free filing" [npr.org]?
Yet here we are wanting to give them more taxpayer funds?
Shame on us for voting for these idiots.
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Better idea (Score:2)
Fund a non-profit foundation to do it. There are plenty of organizations already that help people to file taxes. Just allocation public (and private donation) funds to one or two of those to build the software.There are probably a lot of charitable foundations that would help out.
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There's already true free tax software, there are online sites, open source software, hell, you can use Adobe Reader to file your taxes.
Intuit doesn't just file your taxes though, their value is that they encode the tax code in software to find you ways to pay less taxes, which for most people is a really good deal. They advertise free and then up-sell you a $50 service to file the paperwork necessary to get an additional $500 refund.
Oh, I wouldn't trust the IRS to do it (Score:2)
Years ago I was on an IRS modernization project. They spent billions and had nothing to show for it.
It was years late, way over budget, and the backlog of return processing was huge.
The IRS Response (Score:2)
I was surprised to receive a boilerplate reply that was essentially a version of "We support business, and 3rd party software is good for the economy and keeps people working."
4% of their R&D budget? WTF? (Score:2)
no no no (Score:2)
Ever tried to use any government website? I have been battling with EFTPS, the Treasury website for paying your taxes. It will lock you out if you sneeze. Need a new password? They will send you one in the mail in 2 weeks. Does it work? No, and you're locked out again. Can you change which bank the money comes from? Yes, but actually, nope, it's easier just to open a new EFTPS account, and they will send you a password in 2 weeks.
Hello from Portugal (Score:2)
We have automatic and semi-assisted, ONLINE-ONLY tax preparation software, fully-funded by the government. And is is incredibly efficient for most people. I am betting it didn't cost more to do than what it cost in a single state of the US to pick up the trash for a single day.
Tax returns are a waste and joke (Score:2)
Abolish all tax code spending and implement a flat tax and a minimum tax, eliminating refunds and tax returns for everyone under all circumstances. Or, abolish the income tax for everyone earning less than $500k per year and implement a national sales tax on non food items.
Always the way (Score:2)
I have a similar issue to TurboTax but to do with education.
The Irish government sets a national education curriculum but different schools choose what books to use for each subject and every single parent in the country has to go off and buy the books their school says. But we're all getting them from a handful of booksellers who profit enormously from this arrangement. And because book companies like repeat business they sell these books as work copies, so they profit enormously too. i.e. kids write into
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Jesus Fucking Shit, are you that ignorant? Appointments need to be approved.
And don't you mean "daughter, son in law, or stupid son, or stupider son"?
You want to pay a corporate tax on top of your federal tax, right?
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society pays every time we elect clowns
Re: big government (Score:2)
So instead weâ(TM)ll just appoint whatever rich guy happens to own TurboTax. Itâ(TM)s much better to have a random capitalist hold the reins than a government official we can at least in theory hold accountable (though I agree that the accountability bit needs vast improvement).
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I cringe every time we have some industry insider running an agency. Seems to happen often in the pharmaceutical and military industry. Either bringing private CEOs into the public sector. Or bringing government employees to work as lobbyists for said industries. It's greasy
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Well that settles it. I'm definitely not voting for Hunter Biden in the next election.
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Would you get rid of local taxes, property taxes, and sales taxes? How would you allocate funding to municipalities? Seems like it's going to get a lot more complicated
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Can someone explain why the idea is so distasteful on Slashdot? And, why, specifically the "troll" moderation versus "overrated"? Hmm...off with their heads!
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So then lower income people would be paying a significantly higher effective tax rate than higher income people.
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If you earn $100, pay 30% tax on the income, then buy $50 of stuff at 10% tax, then your effective tax rate is 35%
If you earn $1000, pay 30% tax on the income, then buy $50 of stuff at 10% tax, then your effective tax rate is 30.5%
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There are a certain amount of essentials you have to pay for like food, housing, and clothing. The national tax rates would of course go for the majority of the population as tax burden would be shifted from upper incomes to lower
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And what shift are you talking about? The fancy accountants can write off everything now. Amazon didn't pay "income" taxes for decades--how is that better?
Again, I think it's worth a try. Don't worry, I won't be king any time soon.
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Right, the "rate". Currently tax rates are "progressive" so you have to pay more on higher incomes than lower. If you made it flat you would lose that income
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