Ex-IRS Employee Says Turbo Tax is Intentionally Trying to Make it Harder to File Taxes

However, a former IRS worker, now a TikTok user known as @see_me_in_hindsight, is warning users that TurboTax may not be as user-friendly as it claims. In a viral video, she asserts that TurboTax has been actively lobbying to make tax filing more complex over the years.

Her message is a cautionary one, suggesting that despite the software’s popularity, it might not be the best choice for everyone.

For individuals with uncomplicated taxes, such as those working for employers, having side hustles, or owning a house, she advises them to consider doing their taxes without the aid of TurboTax.

In such cases, seeking professional assistance from accountants or certified public accountants (CPAs) is recommended. She emphasizes the importance of utilizing services authorized to represent individuals before the IRS, and suggests finding qualified professionals on the IRS website.

She states that Intuit does not lobby to make the tax code complicated. Mercado asserts that the company actively works toward a simpler, fairer, and more transparent tax code.

Intuit argues that such a service “would be a waste of taxpayer money and a conflict of interest,” according to OpenSecrets.org. In response to these developments, Intuit defended its position in a statement to Business Insider, stating that the creation of a government-run tax preparation program would be both a financial burden on taxpayers and a detriment to low-income taxpayers.

She emphasized that free tax preparation services are already accessible to 100% of American taxpayers through Intuit TurboTax. Over the past decade, more than 124 million individuals have filed their taxes entirely free using TurboTax, surpassing the combined total of all other tax preparation companies.

She points out the Free File option on the IRS website, which utilizes free fillable forms. While this option requires users to fill in the forms themselves, @see_me_in_hindsight assures that the tax forms are not overly complicated.

It is also currently available to taxpayers in only 13 states. For those with lower incomes, @see_me_in_hindsight recommends the Volunteer Income Tax Assistance (VITA) program, a no-cost service that provides professional assistance to help taxpayers fill out forms.

FreeTaxUSA is highlighted as a great software offering free federal tax return filing services with step-by-step guidance and easy-to-use forms. Levon L. Galstyan, a certified public accountant, recommends FreeTaxUSA for individuals with straightforward tax situations.

Farrington mentions that Cash App Taxes allows users to file federal and state returns for free, although it has some limitations, such as not supporting multiple states.

Users are encouraged to explore the IRS Free File option, VITA program, FreeTaxUSA, and Cash App Taxes, depending on their specific tax situations and needs. While TurboTax remains a popular choice, the controversy surrounding its lobbying practices raises questions about the accessibility and transparency of tax-filing software.

Some view this complicated system as an intentional design. Erin Collins, from the National Taxpayer Advocate, told Yahoo Finance that “Congress, in writing the law, tried to build into the code incentives for social benefits. So for example, to enable parents to work … [there’s] the child tax credit. Once you start supplementing taxable income, that’s where it starts getting complex.”

According to the IRS, when the country first started it didn’t get its first federal income tax until 1862 with President Abraham Lincoln. This tax was later repealed and it wasn’t until just before World War I that the modern federal income tax was enacted.

It was this enshrinement in law that gave the federal government direct authority to fund the many programs in the future that would lead to a more complicated tax system. However, as many things often do, it started simple.

The difference in payments required depended on the amount of money the citizen had earned. Originally the tax system was implemented to offset the effects of tariffs on goods and services, which some at the time saw as an unfair tax on citizens.

In the following years, Republicans and Democrats would fight over the level of income tax versus the level of tariffs. Republicans would often undo the lowering of tariffs that Democrats tried to implement.

The United States raised taxes during World War I and World War II to fund the war efforts. While the income tax rate was lowered again after World War I, the tax increase in World War II would stick around much longer. It wasn’t until 1964 that the top tax rate would be lowered again. The taxes never returned to the 1-7% levels of 1913.

Social Security finally made sure that nearly every American worker was paying some form of taxes. According to the Cato Institute, 25.8 million workers had to start paying a de facto income tax because of social security at the time.

Over the next decades, politicians would institute a variety of new programs and spending increases that are only possible thanks to the income tax. Each new program added a layer to the tax system, and it became much more complicated compared to just taking a percentage of your income and sending it to the federal government.

Mark Steber of Jackson Hewitt commented on the confusion caused by the number of credits that people may or may not qualify for. “Child credit, dependent care credit, earned income credit, education credits, those are all big, all complicated, all very pro-taxpayer, but they’re not automatic check a box and get a big check,” Steber said.

Helen Pahapill, a tax policy advisor for the Estonian Ministry of Finance explained to Yahoo Finance in 2023 just how easy filing your taxes can be. “I really checked it — altogether less than five minutes,” she said. “Basically, I just logged in and checked that all the information was correct.”

While the complicated tax system shares part of the blame, much of that time is spent waiting for answers to the IRS to answer a question. Taxpayers reportedly wait an average of 22 minutes on the phone with the IRS to get their questions answered. (via Yahoo Finance)

The IRS is soon planning to launch a service called Direct File, which will directly compete against the TurboTax service and is being offered for free. It remains to be seen how effective such a program can be at combating services like TurboTax.