The lawmakers asked Intuit to provide details on its research expenses dating to 2018. — Bloomberg
INTUIT INC is being questioned by US lawmakers who say federal tax credits the company received could have been better spent to build a free government alternative to its popular online tax preparation software, TurboTax.
“For years, Intuit’s corporate lobbyists have argued that the federal government should not set up a programme for Americans to file their taxes online and for free because it would be too costly for taxpayers,” the lawmakers, including senators Elizabeth Warren and Bernie Sanders, wrote in a letter to the company.
“Your company’s disclosure reveals that Intuit’s research tax break from 2022 alone could have been enough to fund a year of a free e-File programme for millions of Americans.” The lawmakers asked Intuit to provide details on its research expenses dating to 2018. Warren, a Massachusetts Democrat, and Sanders, an Independent from Vermont, were joined on the letter by senator Richard Blumenthal, a Connecticut Democrat, and Representative Katie Porter, a Democrat from California.
The Internal Revenue Service (IRS), in a report to Congress last year, estimated it would cost US$64mil to US$249mil annually for the agency to run a free-filing programme. With funding from President Joe Biden’s Inflation Reduction Act, the IRS plans to launch a pilot free electronic filing programme for the 2024 tax season.
The plan “will cost taxpayers billions of dollars for something already free of charge and with potentially disastrous effects on the finances of millions of Americans,” said Intuit spokesperson Rick Heineman.
He pointed at an IRS auditor report that said it couldn’t evaluate whether the estimated costs associated with the government-run programme were reasonable.
Intuit has long lobbied against a free government-run tax filing system that would compete with TurboTax, drawing scrutiny from progressive lawmakers. In the fiscal year ending in July 2023, Mountain View, California-based Intuit received US$106mil in federal research and experimentation credits, which amounted to about 4% of its total research and development expenses, according to a regulatory filing.
The credits are universally available to qualifying corporations and not specific to Intuit. “The purpose of the federal research tax credits is to spur innovation and growth for the economy as a whole, not to subsidise the profits of already dominant companies,” the legislators wrote.
Intuit has argued that a government-run programme is unnecessary because about a third of its TurboTax users already receive tax services for free. It has also said that the government would not have an incentive to help people find tax-breaks.
In September, a Federal Trade Commission judge ruled that Intuit misled consumers by claiming its TurboTax product was free when most customers needed to pay a fee for the software programme.
The company separately settled with state regulators in 2022 over similar allegations, agreeing to pay US$141mil in fines and change its advertising. — Bloomberg
Brody Ford writes for Bloomberg. The views expressed here are the writer’s own.
