Lawmakers want to know how TurboTax used $94 million in tax breaks

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Intuit, maker of TurboTax, is in another row with lawmakers — this time over how it spent $94 million in tax breaks. Senators Elizabeth Warren (D-MA), Bernie Sanders (I-VT), Richard Blumenthal (D-CT), and Representative Katie Porter (D-CA) sent a letter to Intuit yesterday blasting the company for not answering questions they have about how Intuit used the tax credits.

SEC filings show that Intuit received $94 million in federal research and experimentation credits in 2022, which grew to $106 million in 2023. The credit is supposed to support research that the company otherwise might not have been able to afford. The four lawmakers initially sent a letter to Intuit on January 2nd, demanding to know how the money was spent and setting a January 16th deadline for Intuit’s response.

They didn’t get the answers they were looking for, and sent a follow-up letter yesterday asking for the same information by February 7th. “The American public deserves answers—not more deception—about how you are spending their hard-earned dollars,” says the letter, which Warren’s office shared exclusively with The Verge.

“With the money that the federal government used to subsidize Intuit’s research, the IRS could have offered free, online tax filing to millions of Americans.”

At the heart of the spat is new tax filing software the IRS finally launched as a pilot this year called Direct File, an alternative to Intuit’s embattled TurboTax that Warren has championed for years.

The lawmakers want to know how much Intuit has spent on research into software improvements, cybersecurity, advertising, and other areas between 2018 and 2023. But they make the argument that a free federal e-file program would be a better use of the funds.

“As the maker of TurboTax, Intuit has been one of the fiercest—and most shameless— opponents of free and simple tax filing for Americans,” the January 2nd letter to Intuit CEO Sasan Goodarzi says. “With the money that the federal government used to subsidize Intuit’s research, the IRS could have offered free, online tax filing to millions of Americans.”

Intuit responded with its own letter on January 16th, which Warren’s office also shared with The Verge. It doesn’t directly respond to questions, instead saying, “our research and development expenses are well documented in our SEC filings.”

In the response, Intuit lambasts the IRS’s new tax filing software. “A government-run tax preparation system is a solution in search of a problem,” the letter says. “Most Americans don’t want the tax collector and enforcer to also serve as the tax preparer.”

When reached for comment, Intuit referred The Verge to its January 16th letter. It told Ars Technica earlier this month that tax credits support research on AI and improvements to “personalized financial recommendations.”

Intuit has gotten in a lot of trouble lately over TurboTax. The Federal Trade Commission (FTC) ruled that Intuit “engaged in deceptive advertising” and issued a final order last week that bars the company from calling its services “free” when most customers aren’t actually eligible for the free tier of service. Intuit also agreed to pay $141 million in restitution to some 4.4 million customers who paid for TurboTax services even though they were actually eligible to file for free using an IRS Free File program.