5 ms·

Congress Scraps Provision to Restrict IRS from Competing with TurboTax

82 points by danso 7y ago

Derek_MK 7y ago
> The Free File program will continue as before. The development in Congress only means the program will not be codified into law. So uh, no real change.
- orev 7y ago
  Exactly, which is the point. If it was codified into law, then it becomes more or less permanent. It’s insane that we allow the tax filing companies to have so much say over how taxes are filed, so at least if it’s not an actual law, there’s a better chance the situation can change in the future.
- danso 7y ago
  It's not nothing. Until it got reported on, making the current status quo "codified into law" (instead of having to be revisited and revoted-on every few years) was very non-controversial. It was a small part of a tax reform bill that otherwise has broad bipartisan support. This was a bill written by Sen. Ron Wyden – and then defended in the New York Times by Wyden [0] – and usually, Wyden is seen as a stalwart champion for consumers (and Internet freedoms). The Free File provision was arguably the archetypal kind of law that lobbyists are able to get approved because people and lawmakers weren't paying attention. In addition, it's not clear that the status quo of the IRS letting Intuit et al. administer the Free File program will continue. Preventing it being codified into law is just the most immediate step, but the controversy surrounding this issue – particularly the use of robots.txt/NOINDEX on the Free File pages -- has resulted in the NY state attorney launching its own investigation [1]. When the Free File Alliance agreement is up for renogiation in how ever many years (I think it's every 3 years?), there may be renewed interest in drastically changing the program. [0] https://www.nytimes.com/2019/04/14/opinion/letters/taxes-congress-internal-revenue-service.html https://www.nytimes.com/2019/04/14/opinion/letters/taxes-con... [1] https://www.propublica.org/article/turbotax-maker-intuit-h-r-block-new-york-regulator-launches-investigation https://www.propublica.org/article/turbotax-maker-intuit-h-r... edit: Here's the URL for the IRS agreement regarding the Free File Alliance. It originally began in 2002, had an original term of three years, and "options to renew for successive two-year periods". Other news articles say the next date is October 2020: https://www.irs.gov/pub/irs-utl/2002-free-online-electronic-tax-filing-agreement.pdf https://www.irs.gov/pub/irs-utl/2002-free-online-electronic-...
rayssgyms 7y ago
It seems like the incentive structure is broken here because the tax software companies have the wrong customer. Their customer should be the IRS. These are the options asI see them: 1) Have the government “make” their own version. There would be little attention paid to user experience, since there’s no competition and the bureaucracy has no incentive to create good products. 2) Have the government hire a company - which is really the same as “making it” since I’m assuming government employees aren’t the ones writing the code. However, if structured properly, the outsourced company could be compensated based on user experience metrics. I see the likelihood of this happening as low. 3) Arbitrarily complicate the tax return policy. Put the burden of understanding on the citizen. Let the “free” (contrived by government intervention in this case) market fulfill the artificial need in the market. This seems to be the way things are being done now. Trouble is, our democracy doesn’t seem to be effective at solving problems like this. It appears that we don’t have the ability to actually have a direct impact on this policy change. Only if the majority party happens to have the political willpower to work on this, and only if that party holds a majority in the house and the senate. Couple that with a $100M+ annual investment (institutionalized bribery from my perspective) from these tax software companies to ensure that elected officials don’t unwind the artificial demand that’s been created, and you have the situation that we are in right now. Let me know if I’ve missed anything or have been unfair. If anyone has any ideas about how an average citizen can affect this policy, I’d love to know.
- mehrdadn 7y ago
  > only if that party holds a majority in the house and the senate Supermajority, or house and senate and president. :(
- microtherion 7y ago
  > Have the government “make” their own version. There would be little attention paid to user experience, since there’s no competition and the bureaucracy has no incentive to create good products. Empirically, the place I live in (Zürich, Switzerland) has offered excellent government created tax filing software for several years (used to be somewhat monstrous Java apps, but nowadays the software is web based and really convenient to use), for ALL taxpayers, as far as I can tell. I would argue that there IS an incentive to the government to make tax compliance simple, and keep grumbling to a minimum.
jackfoxy 7y ago
The income tax system is as much about the government asserting dominance over citizens (and residents) as it is about raising revenue. There could be more efficient revenue collection schemes devised (less friction), taxes with fewer collection points, but then everyone would not have to submit to Caesar annually. It is a tribute to the success of popular delusions that the 16th amendment was, and pretty much all new taxes are, sold as tax-the-rich schemes.
- oceanghost 7y ago
  You get it. :)
r00fus 7y ago
So wait, this is a part of a bill that was customarily added to legislation in the past protecting TurboTax but is not this time (good), but hasn't yet passed the House (ok - probably will) and only has Grassley as a sponsor in the GOP controlled Senate (who knows if it'll pass). Sounds like Intuit needs to fire up their Senate lobbyists and push them into overdrive - I don't see this as a win, not until it passes the desk of McConnell (aka the grim reaper of legislation passed by this House) or signed by Trump (who vetoed another bill that passed with 100% Senator support - which just happened to cause the 2019 shutdown). Let's not break out the champagne just yet.
dariusj18 7y ago
I hope which ever managers that ok'd that particularly insidious strategy at Intuit are shamed and the those staff that said "this is a terrible idea" are rewarded. I know that will never be the case, but I can hope. Those lobbyists have got to be so pissed too.

82 points by danso 7y ago

> The Free File program will continue as before. The development in Congress only means the program will not be codified into law. So uh, no real change.

orev 7y ago
Exactly, which is the point. If it was codified into law, then it becomes more or less permanent. It’s insane that we allow the tax filing companies to have so much say over how taxes are filed, so at least if it’s not an actual law, there’s a better chance the situation can change in the future.
danso 7y ago
It's not nothing. Until it got reported on, making the current status quo "codified into law" (instead of having to be revisited and revoted-on every few years) was very non-controversial. It was a small part of a tax reform bill that otherwise has broad bipartisan support. This was a bill written by Sen. Ron Wyden – and then defended in the New York Times by Wyden [0] – and usually, Wyden is seen as a stalwart champion for consumers (and Internet freedoms). The Free File provision was arguably the archetypal kind of law that lobbyists are able to get approved because people and lawmakers weren't paying attention. In addition, it's not clear that the status quo of the IRS letting Intuit et al. administer the Free File program will continue. Preventing it being codified into law is just the most immediate step, but the controversy surrounding this issue – particularly the use of robots.txt/NOINDEX on the Free File pages -- has resulted in the NY state attorney launching its own investigation [1]. When the Free File Alliance agreement is up for renogiation in how ever many years (I think it's every 3 years?), there may be renewed interest in drastically changing the program. [0] https://www.nytimes.com/2019/04/14/opinion/letters/taxes-congress-internal-revenue-service.html https://www.nytimes.com/2019/04/14/opinion/letters/taxes-con... [1] https://www.propublica.org/article/turbotax-maker-intuit-h-r-block-new-york-regulator-launches-investigation https://www.propublica.org/article/turbotax-maker-intuit-h-r... edit: Here's the URL for the IRS agreement regarding the Free File Alliance. It originally began in 2002, had an original term of three years, and "options to renew for successive two-year periods". Other news articles say the next date is October 2020: https://www.irs.gov/pub/irs-utl/2002-free-online-electronic-tax-filing-agreement.pdf https://www.irs.gov/pub/irs-utl/2002-free-online-electronic-...

rayssgyms 7y ago

It seems like the incentive structure is broken here because the tax software companies have the wrong customer. Their customer should be the IRS. These are the options asI see them: 1) Have the government “make” their own version. There would be little attention paid to user experience, since there’s no competition and the bureaucracy has no incentive to create good products. 2) Have the government hire a company - which is really the same as “making it” since I’m assuming government employees aren’t the ones writing the code. However, if structured properly, the outsourced company could be compensated based on user experience metrics. I see the likelihood of this happening as low. 3) Arbitrarily complicate the tax return policy. Put the burden of understanding on the citizen. Let the “free” (contrived by government intervention in this case) market fulfill the artificial need in the market. This seems to be the way things are being done now. Trouble is, our democracy doesn’t seem to be effective at solving problems like this. It appears that we don’t have the ability to actually have a direct impact on this policy change. Only if the majority party happens to have the political willpower to work on this, and only if that party holds a majority in the house and the senate. Couple that with a $100M+ annual investment (institutionalized bribery from my perspective) from these tax software companies to ensure that elected officials don’t unwind the artificial demand that’s been created, and you have the situation that we are in right now. Let me know if I’ve missed anything or have been unfair. If anyone has any ideas about how an average citizen can affect this policy, I’d love to know.

mehrdadn 7y ago
> only if that party holds a majority in the house and the senate Supermajority, or house and senate and president. :(
microtherion 7y ago
> Have the government “make” their own version. There would be little attention paid to user experience, since there’s no competition and the bureaucracy has no incentive to create good products. Empirically, the place I live in (Zürich, Switzerland) has offered excellent government created tax filing software for several years (used to be somewhat monstrous Java apps, but nowadays the software is web based and really convenient to use), for ALL taxpayers, as far as I can tell. I would argue that there IS an incentive to the government to make tax compliance simple, and keep grumbling to a minimum.

jackfoxy 7y ago

The income tax system is as much about the government asserting dominance over citizens (and residents) as it is about raising revenue. There could be more efficient revenue collection schemes devised (less friction), taxes with fewer collection points, but then everyone would not have to submit to Caesar annually. It is a tribute to the success of popular delusions that the 16th amendment was, and pretty much all new taxes are, sold as tax-the-rich schemes.

oceanghost 7y ago
You get it. :)

r00fus 7y ago

So wait, this is a part of a bill that was customarily added to legislation in the past protecting TurboTax but is not this time (good), but hasn't yet passed the House (ok - probably will) and only has Grassley as a sponsor in the GOP controlled Senate (who knows if it'll pass). Sounds like Intuit needs to fire up their Senate lobbyists and push them into overdrive - I don't see this as a win, not until it passes the desk of McConnell (aka the grim reaper of legislation passed by this House) or signed by Trump (who vetoed another bill that passed with 100% Senator support - which just happened to cause the 2019 shutdown). Let's not break out the champagne just yet.

dariusj18 7y ago

I hope which ever managers that ok'd that particularly insidious strategy at Intuit are shamed and the those staff that said "this is a terrible idea" are rewarded. I know that will never be the case, but I can hope. Those lobbyists have got to be so pissed too.