Free IRS TurboTax Competitor Is Closer After Biden Funding
Intuit has warned investors for decades about the potential threat from government-funded software.
In almost every wealthy country, governments offer a free way for citizens to calculate what they owe in taxes. A notable exception is the US, where online tax prep is a big business dominated by TurboTax owner Intuit Inc., which has maintained its position despite an onslaught of lawsuits and public criticism. But the threat of a publicly run competitor, which has been bubbling under the surface since the internet’s early days, may be more serious than ever. “There’s no reason in the world that a modern economy shouldn’t have a system that makes it easy for such a large group of taxpayers to file their returns,” Secretary of the Treasury Janet Yellen said at a hearing last June, promising the IRS will build its own system once it’s “adequately resourced.”
The resources Yellen mentioned are on their way. The Inflation Reduction Act, which President Joe Biden signed last August, includes nearly $80 billion to modernize the Internal Revenue Service, and for the first time requires that the agency study whether it could build a tool that would replace products such as TurboTax for millions of Americans. An academic consultant enlisted for the study, due in May, advised in her latest research that the IRS adopt “the most expansive version of a direct e-file program.”