Yahoo Finance Why almost nobody knows about TurboTax's free tax product
Through agreements between the IRS and private sector tax preparation companies like TurboTax, Americans making under $34,000 can prepare and file taxes at no cost.
The IRS could develop its own way to pay taxes. Yet companies like Intuit (INTU)— which owns TurboTax— and H&R Block (HRB) have aggressively lobbied against these measures. Experts say they could ameliorate the annoyance of tax time, but would hurt the shareholders of these companies.
Offering free services to these Americans is supposed to be a sort of compromise, but almost no one uses it, a June 2018 investigation from ProPublica found. Only 3% of eligible tax returns were filed through this public/private partnership, which is called the Free File Alliance.
Instead, many of them pay full price.
This week, ProPublica’s Justin Elliott published an investigation as to why — and found that TurboTax, the most popular tax preparation software, appears to actively obfuscate the free program. The company asks Google not to list in search results through its “robots.txt” file.
As Larissa Williams, a search optimization director, pointed out on Twitter, “Without a direct link, it would be VERY hard to find a page searching the internet.”
Furthermore, the TurboTax Free File program is not available through its “regular” website, the company says. (The free website is taxfreedom.com.) Intuit, TurboTax’s parent company, did not respond to a request for comment from Yahoo Finance.
Meanwhile, the company’s other pages that have its paid products, which can cost well over $100, are indexed with Google, and includes “free” language, so these show up in search results.
Furthermore, ads for TurboTax’s paid services come up (or have come up in the past) when people search for the free product. That means TurboTax is actively bidding and winning for placement when people Google certain things, as they search for the free version.
Intuit’s obfuscation of its public/private partnership version comes as a bipartisan bill sits in the Senate, having passed the House, that would give tax preparers the victory they have long sought.
If passed and signed by the president, the bill would take the agreement the IRS has not to create its own free filing system and turn it into law. It would guarantee that TurboTax and H&R continue to receive a steady stream of confused people who could have their taxes prepared for free.
And unless the marketing around the Free File Alliance changes, most of these people would continue to pay. TurboTax, however, has been offering refunds to some people who were eligible who did pay.
Ethan Wolff-Mann is a writer at Yahoo Finance focusing on consumer issues, personal finance, retail, airlines, and more. Follow him on Twitter @ewolffmann.
Congress may ban the IRS from launching free online tax filing