Today, on Tax Day 2022, United States Senator Elizabeth Warren (D-Mass.), a member of the Senate Finance Committee, and Representatives Brad Sherman (D-Calif.) and Katie Porter (D-Calif.), sent a letter to Intuit, the maker of TurboTax, calling out the company’s unethical use of the revolving door to hire former regulators to defend its shady business practices that scam taxpayers out of billions of dollars.
Their letter follows a Federal Trade Commission (FTC) complaint against Intuit for deceiving millions of taxpayers with “bogus” advertising for free tax filing, which also revealed that Intuit hired former FTC Commissioner Jon Liebowitz as an outside counsel.
Given these revelations and Intuit’s history of using lobbyists to oppose consumer protections and protect the Free File program that has scammed billions from taxpayers, the lawmakers are demanding answers from Intuit about its abuse of the revolving door.
“Intuit has gotten away with these Free File scams thanks to extensive lobbying and adroit influence-peddling – including repeated use of revolving door hires. Intuit’s lobbying program topped $3.2 million in 2021, focusing on opposing automatic filing that would expand free tax preparation services and putting up roadblocks for any proposed consumer protections. And Intuit has frequently deployed former regulators as lobbyists… Intuit has shown time and time again that it will not stop its “free” filing scams. That is why we have championed commonsense tax filing simplification reforms, and introduced legislation to close the revolving door that protects corporate scams like Free File,” wrote the lawmakers.
Years of reports have shown that Intuit profits off of vulnerable Americans and uses the revolving door to deploy lobbyists and influence-peddlers to shield its shady practices from government action.
In 2003, Intuit and other financial services companies lobbied the Internal Revenue Service (IRS) to create the Free File program, which would provide free tax preparation services to low-and middle-income taxpayers through these private companies.
However, this program has been a failure – it was supposed to cover 70% of American taxpayers, but as of 2018, only 3% of taxpayers participated.
This severe underutilization of Free File was driven by deceptive practices and sabotage from Free File companies – Intuit deliberately hid Free File from Google results, repeatedly changed names and landing pages to confuse and deceive consumers, and targeted military service members, people with disabilities, unemployed Americans, and people with student loans with upselling scams.
While Intuit left the Free File program in 2021, the IRS has still not set up a government-run alternative.
The lawmakers call out Intuit’s abuse of the revolving door and its lobbying power to protect their scams, including by hiring former IRS and FTC officials and creating significant conflict of interest concerns.
Dave Williams, the IRS’s top negotiator on the Free File Program in the early 2000s, was hired as Intuit’s Chief Tax Officer in 2013 – and the IRS renewed the Free File program four times, despite the program’s failures, while Williams worked at Intuit.
Reports show that numerous other former IRS officials went on to work at Intuit and other tax preparation companies. Recently, Intuit hired former FTC Commissioner Jon Liebowitz to defend itself from a current FTC complaint about “bogus” advertising claims.
Given Intuit’s use of the corrupt revolving door and its use of former regulators for lobbying and representation to shield its shady practices, Senator Warren and Representatives Sherman and Porter are calling on Intuit to answer a set of questions about its business, lobbying, and hiring practices by no later than May 2, 2022.
To prevent companies like Intuit from continuing “free” filing scams, save taxpayers billions of dollars, and close the corrupt revolving door between government regulators and giant corporations, the lawmakers are calling for passage of their Tax Filing and Simplification Act, which they will be reintroducing soon. The legislation would protect taxpayers from corporate profiteering by directing the IRS to create simplified tax filing tools, a truly free replacement to the Free File Program, and give millions of taxpayers the option to avoid tax preparation entirely by providing them with a pre-filed tax return.
Senator Warren has long fought on behalf of taxpayers to make it easier and cheaper to file their taxes, and to hold Intuit accountable for its shady business practices:
- In May 2019, Senator Warren led Senators Richard Blumenthal (D-Conn.), Edward J. Markey (D-Mass.), and Cory Booker (D-N.J.) and Representatives Sherman, Tim Ryan (D-Ohio), and Donald Beyer (D-Va.) in a letter to Intuit calling out the company for deceiving taxpayers about their tax filing options by deliberately directing them to costly profit-generating products, rather than to the Free File program.
- In May 2019, Senator Warren sent letters to the IRS and FTC, calling for investigations into Free File members’ deceptive practices and calling for the IRS to force the private tax preparation companies to refund consumers who were eligible for Free File but were steered into paid products.
- In April 2019, Senator Warren and Senator Tammy Duckworth (D-Ill.) called on the IRS to improve the tax refund process in response to Government Accountability Office findings that showed that low-income and some minority taxpayers were more likely to use tax-time financial products in part because they are more likely to need quick access to cash to meet their financial obligations.