A House Democrat on Monday said the IRS should consider requiring refunds for all taxpayers who paid for tax filing services even though they were eligible for free programs.
Rep. Katie Porter’s (D-Calif.) letter to IRS Commissioner Charles Rettig follows a ProPublica report that said Intuit, the owner of TurboTax, and H&R Block used code on their websites discouraging Google and other search engines from displaying pages about free tax filing programs.
{mosads}Porter’s request comes as lawmakers consider legislation that would codify the existing “Free File” program, which the IRS established with the tax preparation industry to offer free tax services to people below a certain income threshold. Taxpayers making less than $66,000 a year can access the free software, but it’s estimated that only 3 percent of eligible participants take advantage of the program.
The House passed legislation earlier this month that effectively prevents the IRS from competing with the for-profit tax preparers. Progressive lawmakers such as Porter and Reps. Alexandria Ocasio-Cortez (D-N.Y.) and Katie Hill (D-Calif.) raised concerns with the measure because of the IRS provision.
Intuit said after the ProPublica report that it is changing the code on its free file page so that the free version of TurboTax is visible in search results.
Porter called on the IRS to investigate ProPublica’s findings to “determine if it is consistent with the contract these companies signed with the IRS.” She added that if an IRS review matches ProPublica’s reporting, the IRS should “require refunds for all customers that paid for tax filing services that were otherwise eligible for free filing.”
“Customers should be affirmatively contacted by the companies and should not have to call or write to [Free File Alliance] companies to get their money back,” Porter wrote, adding that the IRS should require tax preparation companies that offer free filing services to “immediately amend” their website code and submit to Congress their marketing campaigns to promote the free-file services.
A spokesman for Intuit told ProPublica that the company is “undertaking a thorough review of our search practices to ensure we are achieving our goal of increasing eligible taxpayers’ awareness of the IRS Free File Program and its availability.”
Porter acknowledged that opponents of the legislation to codify the existing free file program allowed it to pass the House by voice vote earlier this month, but pledged more action would follow.
“Trust me, I opposed my own party on this one but we didn’t have the votes to stop it. Stay tuned – we’re still kicking up a fight on this,” Porter tweeted Monday in response to a New York Times columnist.
There are signs the legislation could face obstacles in the Senate due to rising concerns about the free file program.
Sen. Ron Wyden (Ore.), the top Democrat on the Senate Finance Committee, said in response to ProPublica’s report that he plans to raise the issue with the IRS.
“Intuit’s tactics to reduce access to the Free File program and confuse taxpayers are outrageous,” Wyden said in a statement.
Wyden accused the tax preparation industry of trying to maximize profits while making it more costly for people to file taxes. He indicated that he would propose additional action in the coming days, saying “I’m not going to rule anything out at this point.”
“These companies have spent millions of dollars over the years fighting me and efforts to try to make it easier for people to file and more affordable,” he told reporters on Monday. “What we have seen in the last couple of days is that they’re still up to their old tricks, which is trying to hide the ball from the consumer, make the consumer’s life more difficult so they can pad their profits.”
“I’m going to stay at it until we finally get this fixed.”
—Naomi Jagoda contributed.