Speed Reads

the tax man cometh

Tax prep companies spend millions lobbying to keep taxes complicated

Tax prep companies like TurboTax and H&R Block have what you might call a vested interest in U.S. tax policy — and, specifically, in ensuring it stays complicated enough that their services remain necessary for millions of Americans.

In 2016, ProPublica reports, these two companies alone spent a combined $5 million on lobbying efforts, a portion of which opposed "return-free filing," a system in which the IRS would generate pre-completed income tax returns for many Americans who have a fairly simple tax-filing process.

Return-free filing has been discussed but not realized in Washington for decades. "Comparing the distance between the present system and our proposal is like comparing the distance between a Model T and the space shuttle," then-President Ronald Reagan quipped in 1985. "And I should know — I've seen both."

Pre-populated returns could be available to about 60 million Americans, especially those who work at a single job that issues them a standard W2 form that they file along with the standard deduction. For contract workers who file 1099 forms or those with more complicated employment and deduction situations, manually filing taxes (and, for many, using tax prep services or software) would remain necessary even if return-free filing were implemented.