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Saturday, October 22, 2016

TurboTax Maker Linked To ‘Grassroots’ Campaign Against Free, Simple Tax Filing

TurboTax Maker Linked To ‘Grassroots’ Campaign Against Free, Simple Tax Filing

by Liz Day, ProPublica.

Over the last year, a rabbi, a state NAACP official, a smalltown mayor and other community leaders wrote op-eds and letters to Congress with remarkably similar language on a remarkably obscure topic.

Each railed against a long-standing proposal that would give taxpayers the option to use pre-filled tax returns. They warned that the program would be a conflict of interest for the IRS and would especially hurt low-income people, who wouldn’t have the resources to fight inaccurate returns. Rabbi Elliot Dorff wrote in a Jewish Journal op-ed that he “shudder[s] at the impact this program will have on the most vulnerable people in American society.”

“It’s alarming and offensive” that the IRS would target the “the most vulnerable Americans,” two other letters said. The concept, known as return-free filing, is a government “experiment” that would mean higher taxes for the poor, two op-eds argued.

The letters and op-eds don’t mention that, as ProPublica laid out last year, return-free filing might allow tens of millions of Americans to file their taxes for free and in minutes. Or that, under proposals authored by several federal lawmakers, it would be voluntary, using information the government already receives from banks and employers and that taxpayers could adjust. Or that the concept has been endorsed by Presidents Obama and Reagan and is already a reality in some parts of Europe.

So, where did the letters and op-eds come from? Here’s one clue:

Rabbi Dorff says he was approached by a former student, Emily Pflaster, who sent him details and asked him to write an op-ed alerting the Jewish community to the threat.

What Pflaster did not tell him is that she works for a PR and lobbying firm with connections to Intuit, the maker of best-selling tax software TurboTax.

“I wish she would have told me that,” Dorff told ProPublica.

The website of Pflaster’s firm, JCI Worldwide, had listed Intuit among its clients, but removed it after ProPublica contacted them. Pflaster said Intuit had been listed by mistake, but added that the firm does work for the Computer & Communications Industry Association (CCIA), a trade group of which Intuit is a member. Pflaster also said her firm has reached out to multiple groups and encouraged them to share information about the “flaws” of return-free filing.

The only CCIA member that’s involved with tax preparation software is Intuit, and it’s also the only member of the group that has taken a public position on return-free tax filing.

Intuit has long worked against return-free filing. (See How the Maker of TurboTax Fought Free, Simple Tax Filing.) The company has said in filings with the Securities and Exchange Commission that it views free government tax preparation as a risk to its business.

Last year, the company spent more than $2.6 million on lobbying, some of it to lobby on four bills related to the issue, federal lobbying records show.

Both Intuit and CCIA declined to answer questions about their connections to the letters and op-eds. An Intuit spokeswoman, Julie Miller, said in an emailed statement that Intuit works with many types of groups to support “taxpayer empowerment,” and “We feel all points of view deserve to be heard.”

“ReturnFree minimizes the taxpayers’ voice and instead maximizes revenue collection for government,” Miller wrote. “That kind of anti-consumer policy does not advance taxpayer rights.”

CCIA president Ed Black said in a statement, “We think it’s important to help policymakers and the public understand what many already know: ReturnFree is unfair, unworkable and unwise.”

The letters and op-eds — there have been at least eight of them — also appear on a new website,, which Pflaster said her company created for CCIA. It resembles a similar previous site,, which was also sponsored by the CCIA.

Another instance in which CCIA solicited a letter wasn’t successful. Angela Martin, director of an Oregon nonprofit, said a PR professional gave her a sample anti-return-free filing letter last year for her organization to send to Sen. Ron Wyden (D-OR).

Martin knew the caller, Colin Cochran, who works for the firm Hilltop Public Solutions.

Cochran used “a lot of words that advocates would be sympathetic to, like ‘oh, it’ll hurt people with English as a second language,'” Martin said.

Martin was skeptical. So she asked Cochran who he was representing. He said he was working for the CCIA and, when asked, said yes, that Intuit is a member.

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  • Daniel Jones

    Let me explain something here. If filing taxes becomes free, fast, and simple by any means, it directly attacks the TurboTax business model (among other, similar services).
    H&R Block, any for-profit tax lawyer, TurboTax, NONE of these people or businesses want you to have free, simple, and/or fast options.
    That’s simple economics–something else they’d rather you don’t have.
    This is a prime example of why we cannot condone, believe, or trust a political process that is bought and paid for by rich people that want to stay rich at the expense of everyone else. If there is a profit to be had from your misery, they *will* strive to keep you miserable.

  • whodatbob

    Turbo Tax, tax lawyers, accountants and tax preparers are doing what any of us would do if our livelihood was threatened. Fight to stop the government threat to our livelihood!

    That said, simplification of the tax code is a must. But, do you really want the government preparing your return for you? Not I, it is a recipe for gouging by the government.

    Our Government should be listening to the people not dictating to the people. We are a government of, for and by the people, not of, by and for the ruling class (politicians).

    Dump the current tax code replacing it with a simpler code no loop holes.

    • idamag

      You don’t even makes sense. We are the government. We send people to Washington to do the job for us. If we send the wrong people, we get a poor job. Who should be responsible for making the tax form easier – the koch brothers?

      • Kurt CPI

        Some of what whodatbob makes sense (emphasis on “some”). With the revelation that the IRS has been confiscating the refunds of people who’s parents MAY (or may not) have been overpaid social security, I might be somewhat critical of them also being the ones figuring my tax bill. On the other hand, for many people who work a single job for ordinary wages, and who’s employer makes the W-2 information available directly to the IRS, the tax bill is simple. For people who can’t calculate this basic return or fill in the form on a free website that will do it for them, a pre-filled form should be no problem. They shouldn’t be forced to pay someone $75 bucks to multiply exemptions by a fixed figure, subtract from gross income and look up the tax owed.

      • whodatbob

        You missed the point. We are no longer the government, yes the Koch brothers and the rest of the big money contributors have bought “our” elected officials in DC

  • AttilatheBlond

    We see, yet again, that businesses can/do thrive when they, not the voters, control government policy. If government is SO bad to business, why do businesses rely on government SO much?

  • Allan Richardson

    For-profit tax preparers and sellers of for-profit tax software have a natural and legitimate clientele: individuals and businesses with multiple income sources, multiple possible deduction sources, and savings, both sheltered (as in IRA/Roth/401-k) and ordinary accounts. There are others also (which in some years includes most of us) who “probably” can compute their taxes accurately on such a simplified, free form, but suspect that “probably” may not cover all their bases in a given year, and that they might be audited. These middle-class taxpayers are willing to pay a modest fee to lower the risk by purchasing software or patronizing a walk-in office such as Block or one of its competitors.

    There are also lower income families who know they stand to benefit from tax credits designed to ease the sting of poverty (Earned Income Tax Credit and Child Tax Credit, primarily), but may not have their record keeping organized enough (or be financially literate enough) to feel confident to do it on their own. These people are also willing to pay a fee out of their expected refunds to make sure it is done right (and also, unfortunately, willing to have substantial finance charges and “risk insurance” deducted from their refunds in order to get them early). Any honest for-profit preparer warns them that refund anticipation loans will reduce their refund, but they want that convenience anyway in many cases. And of course, an honest company also looks for evidence of the taxpayer committing fraud (most commonly “kid sharing”) in order to avoid signing a return that gets audited, but obviously does not have police power to investigate deeply.

    Walk-in companies often provide both their walk-in services and software, and customers can come in and have the software-prepared returns checked, and corrected for a fee if the taxpayer was the cause of an error, before filing. Therefore, they are not as dependent on software sales as companies like Turbo-Tax, which ONLY provide software and web-based services. So it is understandable that TT and the like would miss the business of those who could file for free. So they take advantage of the current suspicion of EVERYTHING the Federal Government does (because of SOME things it has done that deserve suspicion) by stoking paranoid about the “free filing” on a government web site.

    I have not used such a system myself, but the general idea is that if ALL your income is from payroll checks reported to the IRS by your employer(s), and you have no deductions that require itemizing to use (the ones not requiring itemizing being easy to verify), you can go online and look at the IRS estimate of your return, correct it (subject to possible audit, so keep your justifying documents), and sign it online. Or you could start the process, realize it doesn’t meet your situation (no IRA contributions can be entered, for example), and abort the process, then go find a paid solution, or learn how to do it yourself.

    Although I deplore the letter writing campaign, it is far less objectionable than the lies and rumors that some other PR firms and political campaigns use to get voters to write their Congresspeople and Senators. And it IS possible that, purely by omission, the IRS sample return MIGHT omit some credits, particularly refundable credits, that a commercial provider might find, for some lower income taxpayers. I would advocate that such an online form (which was, I believe, sent out earlier as a postcard in the pre-internet days) be vetted by public advocates and ombudsmen before use to make sure that ALL relevant questions that might render their prepackaged data incomplete are asked up front.

    Full disclosure: after a long career in computer programming, I worked two tax seasons part time for Block and saw the good and the bad (mostly good), and continue to prefer Block’s software for my tax returns, while using Intuit software only for personal bookkeeping (I used Turbo Tax a few times when it was the only software sold, before it was acquired by Intuit, and as far as I know it is good software). I feel that the only really BAD tax preparers are those who maximize their profits by taking advantage of the poor by encouraging them to commit fraud (or even leading them to believe their fraudulent reporting is honest), maximizing customer refunds to get word-of-mouth referral by naive customers, pushing high-interest loans to “get your money today” and ultimately leave the taxpayers hanging when they get audited.

  • Kurt CPI

    Well, under our objective, nonpartisan, irreproachable SCOTUS, Intuit has every right to spend as much as they want fighting anything and everything that might pour water on the the fires of their business. C’mon, Intuit is a person just like you and me, right? And these Supreme Court decisions don’t limit anyone’s voice in the political process or favor individuals and corporations with truck loads of money!

  • Independent1

    I had a falling out with Intuit years ago. I used to use Turbo Tax until I realized that every year they would send me a current disc which they wanted me to pay I believe it was $39.95 or more; and this was after I had been using Turbo Tax for several years. Yet I could walk into Wal-Mart and pick up a brand-new copy of Turbo Tax for $24.95 as a 1st time buyer.

    I wrote them a letter and said hey!! You’re a subscription outfit just like most magazines I get And virtually every magazine subscription I get gives me a discount because I’m a loyal customer whereas you’re trying to rip me off by making me pay $15 more for renewing!! Why do you let someone who’s never been a customer buy your software much cheaper. What gives!!

    I realize you want to attract new clients, but to do that you only need to price your software cheaper than what someone can get their taxes done by people like H&R block (at the time they didn’t have a cheaper internet version so it cost quite a bit more to go to them). Well, intuit refused to give me a break on renewing – so I’ve been using H&R block ever since.