As millions of Americans file their 2021 income taxes online today, Sen. Elizabeth Warren (D-MA) is demanding answers from Intuit about its popular TurboTax e-filing product.
In a letter to Intuit CEO Sasan K. Goodarzi, Warren says the company has used “extensive lobbying and adroit influence peddling” to prevent Americans from filing their taxes for free online.
The Federal Trade Commission (FTC) filed suit against Intuit in March for deceptive marketing, an action Warren calls “both welcome and long overdue.” Reps. Brad Sherman (D-CA) and Katie Porter (D-CA) also signed onto the letter.
Many of Warren’s complaints center on the Free File program, an IRS partnership with a nonprofit coalition of tax prep companies founded in 2003 to provide free tax services to low-income filers. Under the terms of the partnership, 2021 filers with an adjusted gross income of $73,000 or less are eligible for the services, which are listed on the IRS website.
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Intuit’s participation in the program came under criticism after a series of ProPublica reports showed that both Intuit and H&R Block had misled Free File-eligible filers into paying to file their taxes. The companies also deliberately made the free versions of their software difficult to find in online search results, according to ProPublica. Intuit left the Free File program in 2021.
In the letter to Goodarzi, Sen. Warren writes that “the Free File program has been a failure, scamming taxpayers into paying for services that should be free,” adding that “deceptive practices and outright sabotage from Free File companies” were largely to blame for the low rate of taxpayer participation in the program — a rate of only about 3 percent, by Warren’s estimation.
Warren’s letter also points to a March 31st report from OpenSecrets, which found that Intuit employed former government officials, including former members of Congress, in its lobbying efforts. Intuit’s corporate political action committee has given donations to both Democrats and Republicans, according to the data. The company spent $3.3 million on lobbying in 2021.
Warren’s letter also notes a “revolving door” problem in enforcement, in which Intuit hires former regulators to help deflect government action. A recent court filing revealed that the company had hired former FTC chair Jon Leibowitz “to defend itself from an FTC complaint,” which Warren says raises conflict of interests concerns. A 2019 report from Public Citizen found that Leibowitz was one of dozens of former FTC officials with such potential revolving door conflicts.
Happy Tax Day! Sen. Elizabeth Warren thinks you might be getting scammed.
In a letter to Intuit CEO Sasan Goodarzi, Warren, as well as Reps. Katie Porter and Brad Sherman, laid into the company over its TurboTax tax-filing program's fees. According to the lawmakers, TurboTax offers products that "scam American taxpayers into paying for services that should be free."
At the core of their concern is the IRS' Free File program, through which TurboTax and other participants were supposed to offer tax preparation services to low-income Americans for free. But the lawmakers described that program "a failure" due to underutilization, and noted that Intuit left the program last year. According to stats in the letter, the program was intended to serve 70% of Americans, but as of 2018, it was only serving 3%.
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Warren, Porter and Sherman hold TurboTax partly accountable for that, in light of reporting by ProPublica, which found the company was adding code to its Free File site that kept it from surfacing in Google results. The company has since changed that code, according to ProPublica, but that did not apparently satisfy Warren and her colleagues.
They argued Intuit's "influence peddling" in Washington has allowed these issues to fly under the radar. The company previously hired a former top IRS official to be its chief tax officer and, according to the letter, Intuit also hired former FTC chair Jon Leibowitz to defend the company against a lawsuit recently filed by the FTC.
That suit takes aim at TurboTax's "bogus" promises of free tax preparation, accusing TurboTax of "disseminating the deceptive claim that consumers can file their taxes for free using TurboTax" when they often end up getting charged in the end. Intuit called the FTC's claims "not credible."
In their letter, the lawmakers described the suit as "welcome and long overdue."
Now, Warren, Porter and Sherman are asking Intuit to answer questions about its "revolving door" with the IRS and other government agencies. In the letter, they asked Intuit to share the number of employees and external partners Intuit has worked with since 1999, who also held roles in the executive branch. They also asked the question in reverse: How many employees or partners went on to work in the executive branch since 1999? The lawmakers are also asking Intuit to share how much money it's made from taxpayers who make less than $73,000 since 1999.
Intuit has until May 2 to provide answers.
Ultimately, though, the letter isn't just seeking answers. It's also seeking to raise the profile of the Tax Filing Simplification Act. It would give Americans a pre-filled return that they could sign and return to file their taxes. But that bill has been kicking around for years now and only seems to get any mention on Tax Day, so don't hold your breath.
For Warren, the letter is as much about getting answers to questions as it is about pushing companies to change their ways without government intervention. After all, the senator does have a long track record of using letters to get her way.
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