North Texas Daily

The US’ confusing tax filing process serves preparation companies more than citizens

The US’ confusing tax filing process serves preparation companies more than citizens

The US’ confusing tax filing process serves preparation companies more than citizens
March 09
12:00 2023

The April 18 deadline to file taxes is fast approaching, and many Americans once again find themselves navigating a convoluted tax system. Multiple tax filing companies advertise themselves as free for Americans to use, only to slap them with fees and charges at the end of their filing process, according to ProPublica.

Every year, these companies make billions from Americans’ ineptitude to navigate the tax filing process. America’s current system benefits tax-filing companies instead of citizens, which is why it must be reformed to make filing taxes a simple and stress-free process.

According to the Internal Revenue Service, the average American taxpayer spends 13 hours on the entire tax filing process, and billions each year are put in the pockets of tax filing companies. Turbotax has received scrutiny due to its marketing practices, as it tricks people into thinking its service is entirely free to use. Also, many Americans are unaware of free tax filing services, which allows tax filing companies to benefit from their ignorance. 

Free filing services exist but come with stipulations. The IRS’ Free File provides free tax filing to taxpayers who make $73,000 and under. Even though 70 percent of taxpayers qualify for Free File, less than 3 percent use it according to Nerdwallet. Companies that are part of the IRS’s Free File program can control the number of returns filed by having additional limits, such as age, state of residence and further income caps. 

One can only wonder why America doesn’t have a universal free tax filing service like in other countries such as Sweden or Estonia. 

Tax filing companies spend millions each year lobbying against free tax filing systems for all. Intuit, the company that owns Turbotax, spent more than $3.5 million on federal lobbying in 2022, while their competitor, H&R Block spent $2.6 million that year, according to Open Secrets.

Intuit CEO Sasan Goodarzi called an IRS-backed free tax filing system a “conflict of interest” as it would give the IRS a monopoly on investigating, auditing, enforcing and preparing taxes. In reality, tax filing companies benefit the most from the current tax filing process, reaping profits at the expense of taxpayers 

Yet, in European countries where the government does prepare taxes, the process only takes up to an hour, with no complaints of “conflict of interest” in sight. Companies such as Intuit are simply doing everything in their power to take advantage of millions of Americans. 

Even Janet Yellen, the U.S. Secretary of the Treasury, said “Tax filing should be simple,” after visiting an IRS facility. Aside from the political barriers, there are also logistical challenges to creating a free federal filing system for all Americans. A shrinking budget and staff has hindered the IRS for decades. In order to establish a free filing service these issues need to be addressed.

However, Congress passed the Inflation Reduction Act in 2022, which allotted $15 million to the Treasury Department the IRS, so the agency is quite capable to explore the creation of such a service.

America has a sophisticated tax system to ensure efficiency and enforceability. Taxpayers must report numerous characteristics, different expenditures and income to ensure fair taxation, and Congress adds and subtracts numerous provisions to the tax code through tax bills. Interest groups and politicians fight to keep taxes confusing, filling tax-filing companies’ pockets at American citizens’ expense. 

 We must push against this predatory system and convince our lawmakers to support the creation of an easier tax filing service for all Americans. Until then, we must rely on free services, and push for change and reform. If we don’t do this, we will continue to be under the heel of tax filing companies, and subject to their whims. 

Featured Illustration by Erika Sevilla

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Alfred Dozier

Alfred Dozier

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