Massachusetts Democratic Sen. Elizabeth Warren wrote a letter to the CEO of financial software firm Intuit, a week after he tried to clear the air over claims his company hid options to file taxes for free from eligible, lower- and middle-income taxpayers.
“We write to express our alarm at numerous reports that Intuit is actively deceiving American taxpayers about their tax filing options,” Warren said. “Recent reports … reveal that Intuit is taking steps to hide its free tax filing services from taxpayers, raising questions about the company's compliance with its agreement with the federal government.”
An initial report from ProPublica claimed that Intuit – the parent company 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 its TurboTax Free File in search results.
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. While 70 percent of Americans are eligible to file through the program, only 2.5 percent did so in fiscal 2018 – which some have attributed to the companies’ deliberate efforts to hide the service.
“TurboTax also makes it impossible for taxpayers to access TurboTax's edition of Free File from TurboTax.com, a misdirection a TurboTax staffer described as a ‘purposeful strategy’ to make it easier for Intuit to steer taxpayers towards products marketed as ‘free’ but actually flush with hidden fees and upselling,” Warren continued.
Intuit CEO Sasan Goodarzi sent an 11-minute video to workers earlier this month, saying the company was trying to help its customers by prioritizing educational content in search.
“Our choice around search was intended to be the best interest of taxpayers so they were more fully informed about their options and could choose what they felt was best for them,” Goodarzi said.
Firing back at those claims, Warren said taxpayers who specifically searched for “turbotax free file” were directed toward ads placed by the company for other products.
A spokesperson for the company said it had received the letter, is revieiwing it and will respond in "due course."
"We always respect and appreciate the work of Members of Congress," the spokesperson said.
Goodarzi said in the video after the “misinterpretation” of Intuit’s “well-intended” actions, it was removing limitations it had put in place.
The IRS recently said it would bring in an outside contractor to review the Free File program, following a request from a group of senators asking it to do so.
Meanwhile, Los Angeles City Attorney Mike Feuer filed a lawsuit against Intuit and H&R Block amid mounting the claims the major U.S. preparers hid options for low-income individuals to use free-filing services to prepare their tax returns.
In a statement at the time, a spokesperson for Intuit said suggestions it does not support the IRS Free File program are "flat wrong."
H&R Block said it is "proud to have helped millions of Americans with our four free tax-filing options, including the IRS Free File program."
New York’s Democratic Gov. Andrew Cuomo called for an investigation into the same “deceptive” practices earlier this month.
There is a burgeoning battle between private tax preparation companies and lawmakers, as legislation advances through Congress that would continue to prevent the IRS from creating its own filing software. A growing number of lawmakers, including New York Rep. Alexandria Ocasio-Cortez and Massachusetts Democrat Sen. Elizabeth Warren, have voiced support for a system where the IRS is able to play a larger role in the tax preparation process.