Tuesday, April 18, 2023

Why doing your taxes is such an expensive headache every year

Tax prep companies have spent decades, and tens of millions of dollars, lobbying Washington
Warren for Senate

Can I let you in on a secret, Danielle? 

Tax prep corporations like Turbotax and H&R Block don't want you to know this — but you could be filing your taxes for free and without all the hassle. 

Let me break it down:

Every year, when your W2s and 1099s come in the mail, your employer has already sent a copy to the government. So it's no secret: They already know how much you make before you file your taxes.

So instead of all the scrambling, calculating, complicated questions, and late nights (did I just describe your weekend?), the IRS could simply send you a pre-filled tax form based on information they already have. You'd confirm the information, and send it back. A free filing system would take the headache — and the expense — out of doing your taxes. 

And yet, the tax filing process takes Americans an average of 13 hours and $200.

Because tax prep companies have spent decades, and tens of millions of dollars, lobbying Washington to make tax filing as much of a hassle as possible. All so they can maximize profits by reeling in frustrated taxpayers, often with misleading marketing that steers people away from free options.

I've been ringing the bell on this issue for years, and last year, Democrats passed funding that brings us closer to free, streamlined federal tax filing. But Washington needs to continue to hear that the American people are demanding action. Danielle, add your name to say you're in this fight for a free, easy tax filing system.

ADD YOUR NAME

So why hasn't it already been done? Well, Republicans have sided with the giant tax prep companies, demanding that the IRS stops "competing" with private companies. Oh brother.

So these corporations brokered a deal — a deal that was good for them, and lousy for us. They promised to offer low-income Americans free tax prep software, and in exchange, the IRS wouldn't make a free filing program of their own, for everyone.

Since then, H&R Block and Intuit (the owner of TurboTax) undermined their own free filing options: Hiding them from search engine results and using slick designs and upsell tactics to trick clients into paying more. Because let's be clear: These flimsy, free options were never meant to be easy or useful.

The consequence? Tax filing is now a billion-dollar industry in the United States. And — I hope you're sitting down for this — free filing has been implemented in many other countries. We are WAY behind. 

But there's hope to turn the tide. I fought to increase funding to move the IRS closer to offering a free, easy-to-use tax filing service — and we passed it last year.

We have the tools to do this now, and the benefits would be huge. We just need to fight for it, side by side, to keep up the pressure and make sure we get free tax filing over the finish line.

Danielle, add your name to say you're in this fight. As a grassroots movement, we can beat the corporate tax prep lobby.

Thanks for being a part of this,

Elizabeth

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