IRS amends its deal with tax prep software firms, now barred from hiding free products from search, and ends its ban on making its own online filing system
Finding free online tax filing should be easier this year for millions of Americans. — The IRS announced significant changes Monday …
ProPublica
Context & Ripple Effects
This amendment is the hinge point of the whole government-filing arc: the IRS's deal with tax prep software firms had long kept the agency from building its own online filing system, and the agreement also let those firms hide their free products from search results. ProPublica's reporting here captures both locks coming off at once.
Tax prep software firms can no longer bury their free filing products in search results, directly exposing millions of eligible Americans to options they were previously steered away from.
The IRS is freed from the contractual ban on building its own system, giving the agency legal cover to develop what would become its own online filing service.
Second-order effects
With the ban gone, the IRS moved from rule change to build: within three years it had a working prototype and a state-limited pilot, putting a free public alternative in direct competition with the software firms' paid products.
The software firms' Free File arrangement loses its gatekeeping value — if the IRS's own tool reaches simple-return filers first, the companies must compete on product rather than on placement.
Third-order effects
If the pattern holds, US tax filing structurally shifts from an industry-intermediated system toward a government-run option; the IRS's reported $10.5M development and $2.4M annual operating cost for a 12-state tool suggests the public route is cheap enough to expand, though national rollout remains unproven in this coverage.
The trend: US tax filing is moving from an industry-run Free File system with search-level gatekeeping toward a government-built direct e-filing option, with the 2020 amendment as the enabling decision.
New: Following our TurboTax stories, IRS has finally scrapped its almost 20-year pledge to not compete with the tax prep industry. Under new deal, Intuit et al also now barred from hiding Free File versions from Google w/ robots tag https://www.propublica.org/...
In terms of dollars saved to the average American, this could be biggest impact of any investigative journalism this year. Major props to @propublica @JustinElliott @paulkiel https://twitter.com/...
The revelations this year by @JustinElliott @paulkiel @propublica on the misleading tactics of the tax-prep industry have been nothing short of astounding. Now, millions of Americans will benefit from that reporting. https://www.propublica.org/...
The government knows how much you make and automatically takes out taxes. The fact that doing your taxes isn't just the government sending you a check or a bill at year's end & filing only if you have a side hustle is a testament to Turbo Tax's lobbying. https://www.propublica.or…
THIS is what great journalism achieves! Thank you @JustinElliott for your relentless reporting on how @turbotax & @Intuit cheated millions of #taxpayers. Hopefully these changes will improve #IRS Free File. If not, I know who will be reporting on it. #taxseason2020 https://twitte…
New: The changes come after ProPublica's reporting showed how TurboTax maker Intuit tricked customers into paying for tax prep they could have gotten for free.https://www.propublica.org/ ...
The absolute last thing you want to think about right now is doing your 2019 taxes in 2020 but there is actually good news to celebrate related to the tax prep industry. How often can you say that? https://twitter.com/...