The Sleazy PR Campaign to Prevent the IRS From Making Your Taxes Simpler

Who wants to compete with the IRS?

Photo by Tim Boyle/Getty Images

Theoretically, it should be far easier for Americans with simple finances to file their tax returns. Instead of making tax filers putz around W-2s and tax prep software, the IRS could electronically prepopulate their paperwork with the information it already receives from banks and employers, and tell filers how much they owe. If the final figure looked about right, you’d have the option to file. As Matt Yglesias wrote here last year, the whole process could be a five-minute snap.

Theoretically. But for years now, Intuit, the maker of TurboTax, has fought tooth and nail to prevent automatic tax filing from becoming a reality, lobbying against bipartisan legislation to introduce it with the help of a powerful tech industry trade group and conservative anti-taxers like Grover Norquist. Intuit and its competitors in online tax prep don’t want the government cutting its market share. The tax-crusaders want to ensure that paying the government remains as much of a painful, resentment-generating slog as ever. And thus a potent alliance has been born.

Today, ProPublica, which published a great report on this subject last tax season, explains that the Computer & Communications Industry Association, which counts Intuit as a member, has been sponsoring an astroturf campaign to convince Congress that easyfiling would end up hurting the poor. A public relations firm working on the trade group’s behalf has been luring unsuspecting spokespeople to join its cause—reaching out to them without mentioning any lobbying ties.

Here’s how ProPublica sums up one example:

One letter-writer, Richard Smith, the president of the NAACP Delaware State Conference, was approached by a longtime acquaintance with information about how return-free filing would take dollars out of poor people’s pockets. Smith felt so strongly he fired off a letter to Sen. Tom Carper, D-Del., and encouraged other local NAACP leaders to do the same.

Smith said the acquaintance, Anne Farley, told him that if return-free filing was adopted, the government would stop offering free tax filing help to low-income communities. (In fact, none of the bills on return-free filing propose that.)

When ProPublica told Smith that Farley is also a registered lobbyist, he said he was now questioning the information she gave him.

“We may have to retract so far based on my research,” Smith said. “I didn’t question her.”

There’s a reasonable argument against easy tax filing and an unreasonable argument. As you might be able to guess from the underhanded tactics, this seems to be an example of the latter.

The unreasonable argument is that the IRS can’t be trusted to fairly fill out most Americans’ tax forms while also enforcing compliance. Moreover, they say, the poor would be most likely to be victimized, since they have the fewest resources to challenge a bum return. This is nonsense for a few reasons. First, nobody is suggesting that taxpayers be forced to accept the IRS’s calculations. If someone looked at their refund and thought it was bizarrely small, they could go ahead and file their taxes as normal. Nor, as ProPublica notes, is anybody suggesting that we eliminate free tax prep services for low-income Americans. And most importantly, the IRS already receives all of this information. It would simply be transcribing the data it otherwise might use to audit you. As some advocates have written, it’s “scrivener’s work.”

The reasonable argument against e-filing is that such a system wouldn’t be ideal for Americans with complicated taxes. Countries that already have automatic filing, such as Denmark, Sweden, and Spain, have much simpler tax codes, they note. Meanwhile, small businesses might also have to spend extra money getting payroll information to the IRS on a tighter schedule so the government could pre-populate everybody’s paperwork. But there are probably enough Americans who simply input some W-2s and take a standard deduction without adding on any complicated breaks to make the system worth it. Some studies have suggested the system could work for somewhere around 40 percent of taxpayers, saving them time and money.

Of course, e-filing wouldn’t instantly turn everyone’s taxes into a snap. There would still be state returns to deal with, and if we’ve learned anything from health care reform, it sometimes takes the government a while to get a website up and working.

But, in the end, it doesn’t speak well for an argument if you have to trick a mouthpiece into making it for you.