Getting Intuit

Matt Birchler on Birchtree (emphasis mine):

To be clear, I think it’s fine if private companies like Intuit and Square continue to make tax software and compete on delivering the best experience at the best value to consumers. Despite all my complaints with how we got here, I genuinely do think these companies make great products that do deliver a simpler, faster experience than we had years ago. I just think there should be a free option managed by the government to file your taxes as well.

I want to go a step further because I’ve personally used both TurboTax and the IRS’s Direct File. Let me be abundantly clear: Direct File is better than TurboTax.

Part of the propaganda machine that companies like Intuit have run is the idea that the government can’t do anything well and that whatever they come up with would be much more difficult to use than the privately-made alternative. Let’s not forget that Intuit is infamous for misleading marketing and anti-consumer behavior.

Turns out, that’s not the case. Using Direct File is almost identical to using TurboTax, except it’s not constantly trying to upcharge you for services you don’t need. I found Direct File’s explanations of exactly what each item is and who needs to fill it out to be far less confusing, to boot.

The fact that many Americans are happy to pay money in order to file their taxes is the product of a decades-long effort by private industry to convince us there is no alternative. I’m of the opinion that taxes shouldn’t be so complex as to require third-party software but, since that’s a pipe dream in America, so I’d settle for what Matt talks about above: private industry competing to provide a better service than the government benchmark.

Direct File has significant limitations: you need to have a relatively simple tax return and live in a state without state income tax. However, the IRS has proven that it’s capable of making a great product — as evidenced by just how desperately Intuit and others are trying to undermine it. Filing taxes is indeed far easier than it used to be but, if the government is able to develop Direct File into the fully-featured system it was envisioned to be, filing with Uncle Sam will be even easier and cheaper.