New York’s Democratic Gov. Andrew Cuomo is calling for an investigation into major U.S. tax preparers over claims they hid options for low-income individuals to use free filing services to prepare their tax returns this year.
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In a statement on Wednesday, Cuomo called on the New York State Department of Financial Services and the New York State Department of Taxation and Finance to look into companies, like H&R Block and Turbo Tax.
"The allegations against these major tax return preparers are disturbing, and New York will not stand idle as the public's interest is undermined in order to pad the profits of wealthy corporations," Cuomo said.
Individuals with incomes of $66,000 or less are eligible to file for free through the IRS’ free file program – a partnership with third party preparers. Cuomo’s calls for investigation reference a report from ProPublica that Intuit – the maker of TurboTax – tricked taxpayers into paying for services by hiding the free service options from Google searches and misleading advertising. It reportedly did that by adding code on its site telling search engines not to list TurboTax Free File in search results.
In a statement, a spokesperson for Intuit said the characterizations are "untrue" and that the company looks forward to "sharing the facts with New York regulators."
H&R Block said it believes it is in "full compliance with the Free File agreement," adding its program grew 8.3 percent this tax season.
There are escalating tensions on Capitol Hill between some lawmakers and the major tax companies. Some lawmakers think the IRS should create its own filing software, allowing it to compete with the private tax preparers. New York Democrat Alexandria Ocasio-Cortez went so far to say the IRS should do your taxes for you, while Massachusetts Democrat Elizabeth Warren proposed legislation that would move the process in that direction.
In legislation advancing through Congress, however, an IRS reform bill includes a provision that would prohibit the agency from creating its own filing software and competing with third parties.