In July, we wrote about a new coalition, the Coalition for Free and Fair Filing, that was launching a campaign to support the creation of a free IRS “direct file” program to be piloted next year, thanks to President Biden’s reinvestment to modernize the agency.
In the Public Interest joined the more than 200 organizations in the Coalition for Free and Fair Filing. At the time, we said, “It’ll take a groundswell of demand for this common-sense public option to overwhelm the power of the tax prep industry and their allies on Capitol Hill.”
We’re happy to report that, earlier this month,, the IRS announced details of the 2024 Direct File pilot, which will be available to taxpayers in just a few short months. In its very first year, Direct File will cover a range of tax situations common to low- and middle-income households; it’s estimated the scope will cover up to about half of LMI taxpayers.
In September, I wrote an opinion piece that ran at Progressive.com and was picked up in a dozen or so other papers. In that piece, I argued that the way the tax prep giants fought against Direct File followed a discernible pattern of the way corporations operate. Because knowing that pattern can help consumers and citizens see through those corporate efforts, we’re reproducing that column in part below.
For most of us, even those perfectly happy to pay taxes, actually filing our tax returns with the Internal Revenue Service is a frustrating, complicated, and opaque process. And if you make a small mistake, you could be threatened with additional fines, or even prison. Recently, IRS leadership, with support from the Biden Administration, proposed modernizing the filling process to make it easier for most Americans to file, bringing it in line with nations like New Zealand, Japan and Denmark.
According to Treasury Secretary Janet Yellen, the IRS modernization plan includes intensifying efforts to enforce tax laws on the wealthy, increasing the quality of customer service through in-person taxpayer assistance centers and shorter phone wait-times, and digitizing more IRS functions.
But now, Congressional Republicans and tax-prep corporations are teaming up to protect our nightmarish tax-filing system—and they’re using a century-old playbook to do so.
It’s easy to understand the motivations behind this unholy alliance to kill tax reform. The proposed IRS e-filing system would make the process of paying taxes simple and painless, saving Americans billions of hours a year and allowing them to keep the billions of dollars they now pay annually to tax-prep firms like Intuit, which last year made $11 billion in profit thanks in part to its ubiquitous Turbo Tax software.
Anti-tax Republicans want the process of filing taxes to be frustrating and expensive because it reinforces their arguments that big government is wasteful and inefficient—even though the waste and inefficiency, in this case, is the direct result of their own policy choices.
Tax firms that profit from the current inefficient filing system have come out swinging against the IRS’s proposal, and if their excuses sound familiar, that’s because they are.
In our new book, Corporate Bullsh*t: Exposing the Lies and Half-Truths That Protect Profit, Power, and Wealth in America, my coauthors and I show that wealthy corporations have long used the same set of well-worn claims to convince people that their profits are more important than the public good. From trumpeting the medicinal properties of cigarettes, to extolling the character-building power of child labor, big corporations have falsely argued that making products like Turbo Tax obsolete would hurt the very people the policy is intended to help.
In the book, we dig into more than 100 years of U.S. history to place these specious claims into recognizable categories, into which Intuit’s most egregious arguments against tax reform neatly fit.
You can read the rest here.
The good news is that the arguments of the tax prep industry didn’t prevail. And, more importantly, what did prevail was the principle that public goods available to all require public institutions with the resources and capacity to serve.
Donald Cohen
Executive Director