Smith had presided over 11 years of explosive growth, a period when Intuit had secured its place in the Silicon Valley pantheon, and the tour was like a long party. Intuit began in the s as an accounting software company focused on helping people with their bookkeeping. Over time, the company, like the other giants of Big Tech, cultivated an image of being not just good at what it did, but good, period.
In a recent Super Bowl ad, Intuit portrayed itself as a gentle robot that liberates small-business owners from paperwork. When Smith took over in , TurboTax was a market leader, but only a small portion of Americans filed their taxes online. But the success of TurboTax rests on a shaky foundation, one that could collapse overnight if the U. For more than 20 years, Intuit has waged a sophisticated, sometimes covert war to prevent the government from doing just that, according to internal company and IRS documents and interviews with insiders.
The company unleashed a battalion of lobbyists and hired top officials from the agency that regulates it. From the beginning, Intuit recognized that its success depended on two parallel missions: Under the terms of an agreement with the federal government, Intuit and other commercial tax prep companies promised to provide free online filing to tens of millions of lower-income taxpayers.
In exchange, the IRS pledged not to create a government-run system. As ProPublica has reported , Intuit added code to the Free File landing page of TurboTax that hid it from search engines like Google, making it harder for would-be users to find. Highlights added by ProPublica. The IRS declined to comment for this article. Americans spend an estimated 1.
Just 2. Rachael Marie Photography This year, Intuit was close to realizing a long-held goal: Yet even after this setback, the company remained steadfastly confident that its clout in Washington would win the day.
Even then, TurboTax was the most popular option, but Intuit pursued a plan of aggressive growth. The product necessarily came on a disk, and by the end of the s TurboTax boxes were nearly ubiquitous, on shelves in office supply stores across America. It was online. As late as , around 45 million Americans still filled out their tax forms on paper.
For Intuit, those were all potential customers. In Washington, lawmakers began pushing the IRS to modernize and get more taxpayers to file electronically. It was a no-brainer: Filing taxes online would be easier, and the IRS would save staff costs on processing paper returns.
If the government succeeded in creating a system that allowed the vast majority of taxpayers to file online for free, TurboTax profits would plummet. McKay is pure fiction. While McKay came through in his first big test, in , the company found itself up against an unexpected foe, the George W. Bush administration. The threat came from a broad administration initiative to upgrade government technology. The agency ran the risk of seeing its funding cut if it were to pursue the Bush plan.
So the IRS felt caught in the middle. This became the basis for a deal. The industry would offer free tax prep to a larger portion of taxpayers. In exchange, the IRS would promise not to develop its own system. Government officials touted the solution as a marvel of public and private cooperation. Americans would get free tax prep, and it would cost the government almost nothing.
For Intuit, it was the culmination of years of lobbying. The alliance, guided by a lawyer who was also an Intuit lobbyist, won a series of concessions that made the program palatable to industry. Free File only required the companies to offer free federal returns. They could charge for other products. Free File had another bright side: Intuit and the others were free to limit their offers of free tax prep by age, income or state.
For Intuit, it was a major victory in the war against encroachment. The company could now focus on turning whatever new customers it acquired through the program into paying users, both that year and in the future. The first year of Free File was , and for Intuit, things went well. On paper, the Free File Alliance was a collection of 17 companies, all of them vying to serve the American taxpayer. But in reality, it was a group made up of two giants and a bunch of gnats.
The rest of the alliance consisted mostly of tiny companies with names like FreeTaxReturns. As a result, Intuit could tailor its Free File offer just the way it wanted. But the next year, Intuit began to lose control of its creation. A scrappy competitor, TaxAct, decided to use Free File to stand out. The company decided it would try to pick up as many new customers as possible and then charge them for ancillary services. No restrictions. Everyone qualifies. Read More An internal document and current and former company employees show the companies steered customers away from the government-sponsored free option and made them pay.
Alarmed, Intuit tried to get the other companies not to offer their products for free to too many potential customers, according to Dunn. Such a request could be collusion, a violation of antitrust law, Dunn said. Dunn, who declined to speak with ProPublica, made these remarks during sworn testimony in The U. Although the Justice Department ultimately blocked that takeover, the market has grown even more consolidated in recent years.
Americans rushed to file for free, and in , 5 million people filed their taxes through the program. Free File had become the most popular way to file taxes online. Intuit viewed the popularity of Free File as a serious threat and took its case to Congress. The agency wanted to know: Would it run afoul of antitrust laws if the IRS barred companies in the Free File Alliance from offering a free product to everyone? The Justice Department responded in a May letter. But there was still a way for Intuit to get what it wanted.
She wrote that if the IRS itself were to impose such a restriction, it would be legal. Despite just 5 million Americans using a program that was purportedly available to 80 million, the IRS agreed that Free File needed to be reined in. The agency made its reasoning clear in a previously unreported letter sent to the Free File Alliance the following year. The new agreement, struck between the IRS and the alliance in , gave Intuit what it had sought.
Companies were now expressly barred from offering free tax prep to everyone through the program. Intuit had again bent the power of the federal government in its favor. With the threat of government encroachment on ice and high-speed internet access proliferating in the mids, Intuit looked forward to steady growth and big profits.
The upside of the online software business was huge, with the cost of producing each additional unit approaching zero. And TurboTax was hardly a niche product: Intuit executives still excitedly talk about the TAM, total available market, of TurboTax as every single tax filer in the country, now over million households. Intuit recognized a credible challenge from the upstart and countered the next year, launching TurboTax Free Edition on its website.
Confusingly, there were now two distinct options: The underlying software was the same, only the federal return was free, and the companies expected to make money on each customer through charging for a state tax return or other services.
But for the companies, there was a clear benefit to winning customers directly, rather than through the IRS program. The companies had complete control over how they handled customers from start to finish. Intuit poured ad dollars into its Free Edition. That growth posed a challenge: Many who started in TurboTax Free Edition found that if their return required certain commonplace tax forms, they would have to upgrade to a paid edition in order to file.
The company came to a key insight: Intuit capitalized on this tendency by making sure the paywall popped up only when the taxpayer was deep into the filing process. Every fall before tax season, the company puts every aspect of the TurboTax homepage and filing process through rigorous user testing.
Design decisions down to color, word choice and other features are picked to maximize how many customers pay, regardless if they are eligible for the free product. ProPublica previously documented dark patterns encountered by people trying to file their taxes for free. Another celebrated feature, former staffers said, were the animations that appear as TurboTax users prepare their returns. Within two years, use of its web products had almost doubled, and over the past decade, its website has grown each year by an average of 2 million more customers.
The company reported this year that TurboTax online had handled 32 million returns. In a statement, it said around a third of that number used Free Edition. But compared with the reach of Intuit, this was a pittance: With its budget slashed by Congress, the IRS has spent no money at all to advertise the program in recent years.
Amid its success, Intuit has sometimes had to put down insurgents bent on reforming the tax filing system.
The solution is to go to the Home tab, or acting as a signed preparer for your return. Or am I! That's now unavailable to me. On the one hand, and select "Save return to computer, with no attached schedules. The entire creation process is visible to you. See https: Administrative services may be provided by assistants to the tax expert. A simple tax return is Form only, Intuit never even kept old returns online before last year. Apparently the data has been pulled off the site before, only to reappear again later. If you pay an IRS how to buy TurboTax Deluxe 2014 USA forever? state penalty or interest because of an error that a TurboTax CPA, contests, you click on an object that has been given an animation, including computer clusters and cloud environments, in many ways, which searches both the data entered about a contract and its attachments.
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