One month before the start of Donald Trump’s second term, Intuit, the parent company of TurboTax, announced a $1 million contribution to his inauguration committee. At the time, the company told Politico the donation was “part of our decades-long commitment to bipartisan advocacy.”
But that long-time “bipartisan advocacy” was done with a goal in mind. As Politico reported: “Intuit has numerous interests in Washington that would incentive it to gain favor with the incoming Trump administration. It has spent more than two decades lobbying against the IRS making it easier to file people’s taxes online.”
Few Americans know this, but our tax filing system is an outlier by international standards, and not in a good way.
On Wednesday, the White House granted Intuit’s wish. The Associated Press reports that the Trump administration “plans to eliminate the IRS’ Direct File program,” the government initiative that allowed some taxpayers with simple returns to file with the Internal Revenue Service for free. The industry’s gain is a major loss for American taxpayers.
The 2025 edition of the National Retail Federation’s annual tax return survey found that almost 40 percent of U.S. adults will prepare our taxes ourselves using computer software — nearly double the next most popular method of filing. Intuit, along with H&R Block, monopolizes the market for that software. And it’s a lucrative market: “Americans spend an estimated 1.7 billion hours and $31 billion doing their taxes each year,” ProPublica reported in 2019.
Supporters of Direct File hold up the program as a powerful demonstration of how government can help people and save them both time and money on an annual chore almost all of us despise and stress over (to the point that fatal car accidents actually increase on April 15 compared to other days). But for years, Intuit used the revolving door between Washington regulators and the industry and spent millions upon millions of dollars lobbying Capitol Hill to prevent threats to its bottom line like Direct File from ever happening.
Just as companies like Intuit feared, the introduction of Direct File in 2024 under the Biden administration put pressure on their market. As market researcher IBIS World noted in its annual report on the tax prep industry, “competition is squeezing the basic tax preparation market as more people file electronically for free.” Naturally, tax-prep giants lobbied to make Direct File go away.
The industry says Direct File is unnecessary because they already offer consumers a free online option, but this is a disingenuous claim. Investigative journalists have revealed that the companies deliberately make their free offerings hard to find, and relentlessly upsell filers using their gratis on everything from audit insurance to fees for receiving their tax refund immediately from the companies (instead of waiting a few weeks for the IRS to process it).
In 2022, Intuit agreed to pay $141 million to over 4 million Americans to settle claims that it had misleadingly promised free tax-prep services (though the company did not admit wrongdoing). Last year, the Federal Trade Commission ordered TurboTax to cease marketing their offering as “free,” unless either everyone could use them at no charge or they listed the percentages who could, arguing that so few filers qualified for the “free” offering it amounted to misleading advertising (the company is appealing that decision).
For most of us, prepping our own tax returns amounts to so much make-work, even if we don’t know it.
Nonetheless, Sen. Elizabeth Warren, D-Mass., alleges that the deceptions continue. In a letter released this week (and co-signed by two other Democrats, Sen. Ron Wyden, of Oregon, and Rep. Mark Pocan, of Wisconsin), she revealed that when her staff tested a simple return with TurboTax, they not only faced repeated promotions for the company’s paid services, the tax giant ultimately moved the taxpayer from their free service to their $69 “Deluxe” version without any notification.
The end of Direct File fits neatly in the predatory economy Donald Trump and his Republican enablers want. His administration has all but destroyed the Consumer Financial Protection Bureau at the behest of Big Tech. He’s delighted the banking industry by revoking CFPB regulations that capped credit card late fees, and he is expected to sign legislation rolling back a Biden-era rule to limit bank overdraft fees to $5. His Department of Justice has pulled back on policing financial crimes, from fraud in the crypto industry to bribery of foreign officials. And the IRS, partly at the direction of DOGE, is shrinking its workforce by tens of thousands with both buyouts and illegal firings. That will make it harder for ordinary taxpayers to receive help from the agency — and easier for billionaires to evade taxes.
Few Americans know this, but our tax filing system is an outlier by international standards, and not in a good way. In more than three dozen countries, the government sends eligible taxpayers a pre-filled return. If the return is accurate, the taxpayer just has to sign off on it; if it’s not, the taxpayer can dispute it.
It should be this way here in America, too. During the Clinton administration, Congress passed a law ordering the IRS to roll out a “return free” offering for people with simple returns by 2008. You might notice we’re still waiting.
It’s not because this system is difficult to create. When we file taxes in the U.S., we are sending the government information it already has in its possession. The W2 and 1099 forms we receive annually are also sent to the government. Instead a large part of the reason we don’t enjoy ease of tax filing is because the tax prep industry — and especially the few giant providers like Intuit and H&R Block — makes large amounts of money charging us to help us perform a service that should cost us nothing.
This status quo effectively means that for most of us, prepping our own tax returns — even via a now defunct free service such as Direct File — amounts to so much make-work, even if we don’t know it. But now taxpayers won’t even have that option — and the tax prep monopoly can make a few more bucks at our expense.
