Ask HN: How does TurboTax get away with dark patterns?
Intuit, the owner of TurboTax is one of the largest players in tax e-filing. How do they seem to employ so many dark patterns with little complaint from consumers? TurboTax employs user hostile UI patterns that attempt to get consent to release filing information to Intuit and 3rd parties, switch to more expensive plans, and open new Credit Karma accounts (another Intuit owned property). I don’t understand why consumers are not more frustrated.
134 comments
[ 3.3 ms ] story [ 114 ms ] threadOther modernized nations have nothing like this insanity, often sending people yearly reports they can accept (since for most cases they are accurate) or send in amendments. This is far from the only issue that business interests have made the USA almost uniquely fucking stupid about.
This would be perfect. It doesn't make any sense that my employer, banks, etc has to send everything in, but then I do to.
I wish someone would set up a class action lawsuit against the IRS on behalf of everyone with ADHD, claiming that forcing everyone to do tedious paperwork is a violation of the ADA.
When I'm to do my taxes, I get an auto generated draft and the only thing I have to do is click the "Accept" button.
You only have to fill your taxes manually if you're self employed or have some sort of earnings other than your job, in which case, the company that does you accounting, does the taxes for you too in 15 min.
The problem the IRS is trying to solve is collecting taxes on money they don't know about. For example, if you sell illegal drugs, you should be paying tax on that income. But obviously you don't report to the government the amount of illegal drugs you sell. So they can't just send you a bill for your taxes.
It is odd that every American has to suffer for this obscure corner case, but they probably lose a lot of revenue if they stop taxing drug dealers, so here we are.
It's not the IRS caring about losing revenue, but lobbying from tax firms that's the problem.
The main problem tax returns are trying to solve is that Americans aren’t enraged enough at their taxes to demand lower taxes (on the rich) or a much simpler (and regressive) flat tax. I posit that there is no technical or financial incentive at all, and that the aim of the tax filing regulations is entirely political.
But if I understand correctly, that corner case isn't even "real". Suppose you were a drug dealer in a country that automatically handles tax, and most citizens don't need to file a return, e.g. the UK. I'm pretty confident you can still be prosecuted for failure to report the income from your drug dealing, just as you could be for not reporting any other income where the tax wasn't removed from the paycheck.
But it's against the law. The law specifically prohibits the tax agency (IRS) from providing pre-filled tax forms for taxpayers. Why? Who knows... I can't read the minds of Senate and House members! But I'd very confidently place a bet that it's entirely because of careful lobbying by the two companies (Intuit and H&R Block) who make large amounts of money off the current system.
References:
https://www.vox.com/policy-and-politics/22596072/irs-turbota...
https://www.propublica.org/article/turbotax-just-tricked-you...
They know the money you make, they can make it free and easy but they don't want to cut the middleman.
You have entrenched interests keeping the whole process as difficult as possible.
A person up the comment chain in Spain said that's not the case there, and i can confirm the same for France - everything they know is pre-filled, and it's up to you to declare the rest. Of course some people will underreport, but so will those willing to in the American system ( for tips, cash payments, freelancing they can be fairly certain the IRS can't know). Nothing changes besides middlemen lining their pockets and regular people losing time.
I hate to defend Intuit, but this is backwards. It is more accurately "Other players and Intuit" where "Other players" means the Republican Party. Thanks to efforts by Grover Norquist, the GOP is fundamentally opposed to making it easier for the IRS to collect taxes.
Intuit's lobbying efforts are practically meaningless in comparison.
Nope. A "green pass" is a QR code saying FirstName LastName (born on X, only available for border crossings) has had 3 doses of Pfizer, last one on date Y OR has had a negative PCR on date Y. The apps used to read and validate those QR codes don't track anything and there's no other medical or personal information.
Customers are very much frustrated though and I believe the Cash app started letting people file taxes for free this year.
it's free, yeah
Fuck them. I just wrote my own. I first tried some alternatives like GNUcash, but found it best to just write what I needed (account ledgers, reconcile bank statements, generate P&L and BS reports). I refused any other solution with any dependencies on "the cloud" or any entity.
QB is truly about the shittiest software on the planet, a reputation maintained and expanded over the decades. The simplest recourse, with minimal emotional toll, is to just not use their crap.
But I've been worried if that indie is going to survive financially. Any tips on writing your own?
Industries with infrequent transactions are more prone to abuse like this.
Second, the reason it's this way...is because of the excessive lobbying to keep it this way, of which Intuit is one of the largest players. In fact, there is no reason for the IRS not to just tell you "here is what we think you owe/should be refunded", and for you to say "Nope, here's why (and e-file relevant forms)", or "Yep, that's correct", except that lobbying has prevented it (well, and the last time it came up one of the two political parties was against it ostensibly because 'big government')
Only for certain definitions of "you". All the available offers have various restrictions.
https://www.irs.gov/e-file-providers/free-file-fillable-form...
>Intuit revved its new lobbying machine. Even before the OMB report was publicly released, a group of Republican lawmakers, led by TurboTax’s hometown congressman, wrote to the agency arguing that there was no reason for the government to “compete” with the “well-established” private tax prep companies. Intuit’s lobbyists also went above the OMB and pressed their case directly to the White House, Forman recalled.
>At the IRS, “all hell broke loose,” remembered Terry Lutes, who was then the head of electronic filing at the agency. Intuit’s clout on the Hill meant that lawmakers were soon accusing the IRS of making “secret plans to undercut the industry,” Lutes said. The agency ran the risk of seeing its funding cut if it were to pursue the Bush plan.
>The IRS commissioner at the time, Charles Rossotti, also opposed the idea. The IRS’ customer service staff, already too thin to respond adequately to Americans’ questions about the tax code, would have to grow substantially to handle millions of software queries. Congress “will never give you sufficient funding,” Rossotti told ProPublica.
https://www.propublica.org/article/inside-turbotax-20-year-f...
I just don't understand why they're encouraging e-filing when they can't keep track of them properly.
You can expect people to do what is in their own interest without supporting them. I expect that the muggers will mug me. I don't support them in mugging me.
They are an amoral profit seeking company who is screwing you and I over so they can benefit. That doesn't mean it should automatically be illegal, but it's not clear to me why you would like this.
I tell the story because I think it illustrates a lot of reasons companies can get away with bad behavior:
1. Only a subset of consumers recognize the bad behavior and know who to contact.
2. Most consumers are not motivated to complain. In the above story, most people would probably stop when the Intuit website doesn't work (I usually give up too). There is a free-rider problem. My complaint could benefit lots of people if a company changes its behavior, but I alone incur the cost of complaining.
3. When a consumer successfully complains, companies can sometimes quietly make the problem go away for the one consumer and avoid regulatory action. Intuit called me, resolved the issue only for me, and we both move on. With the issue resolved, the regulator has less reason to continue investigating.
4. Even when regulators get enough complaints and go after bad behavior, they are up against powerful attorneys and lobbyists. And even if the regulators win, the company probably has lots of substitute ways of achieving the same goals that weren't contemplated or prohibited by the settlement/law/etc.
"I don’t understand why consumers are not more frustrated." -- they are extremely frustrated, why do you think they're not frustrated?
The process for online filing with the IRS is a hot mess, and extremely difficult to navigate. For example, it is impossible for me to file 1099-NEC for my contractors without first obtaining a special ID delivered via mail in 45 days. I can't print and mail from the IRS website either -- I have to first request the form. Check out this cryptic mess
https://fire.irs.gov/
Ah yes:
https://www.reuters.com/article/legal-us-otc-intuit-idUSKBN2...
https://www.npr.org/2019/05/07/720941665/la-city-attorney-su...
It was a bit of a different construction, but the premise of "we want to make money and prevent a government service from being accessible using software made by the government".
Turbo Tax also provides some kind of service to help you if the IRS comes after you for some errors. One of my friends paid extra for this, him made a simple calculation error in their tax return, the IRS came after him for it, and Turbo Tax didn't do shit because he made the error, not Turbo Tax. So they're giving you the opportunity to pay them extra to cover the cost of their mistakes.
I honestly think more people would be willing to pay higher taxes if the process was low-effort for most people. For example, if you work for a company that witholds taxes from your paycheck, you shouldn't have to do anything; either you get a check in the mail if you over-payed, or a bill if you under-payed, and you answer a yes/no question to adjust your W-4 for the next year.
TBH I think this is why Intuit has been so successful in their lobbying efforts. A key goal of many politicians is to create tax breaks for the rich, and by making taxes as complicated as possible, they can trick the populace into agreeing to just about anything that would "simplify" the tax code.
There are plenty of failure modes to this process that could potentially get bad, but in general the IRS wants to give you a chance to settle honest mistakes amicably, and only really "go after" you with tax evasion charges if you persistently avoid filing and paying. They're tax collectors, not cartoon villains.
Sauce: Made a mistake on my taxes once, got contacted by the IRS, followed the procedures to correct it.
They have lobbyists [0][1], and you don't. But don't worry, "experts" and oligarchs tell us that corruption here is among the lowest in the World.
>Using lobbying, the revolving door and “dark pattern” customer tricks, Intuit fended off the government’s attempts to make tax filing free and easy, and created its multi-billion-dollar franchise.
[0] https://www.propublica.org/article/inside-turbotax-20-year-f...
>The biggest obstacle, the New America experts warn, is the lobbying power of Intuit and its allies.
[1] https://www.latimes.com/politics/story/2021-10-21/california...
The reason I use it is that I've used it in the past and I know it works for my somewhat weird tax situation. It sucks. Intuit is a terrible company. But there is no way to know that I'll be able to actually navigate the wizard for some other product before I dive in. And all of the free options definitely don't support my situation. If I wanted free I'd be stuck with the raw forms and I'm not confident I'd do it all right.
I'm a weirdo and I actually like the precision of doing taxes, but the consequences of botching it are very high. So I go with the thing I'm familiar with and I get mad that TurboTax is taking $110 of my dollars every year for crap that should be done much more simply.
For years, I kept experimenting with different approaches to filing my taxes. I started out with TurboTax, and being so painfully aware of their bad reputation, I kept trying out every alternative I could think of - including their biggest competitor TaxAct and three different tax firms. After all that work, I am back to using TurboTax. Obviously, it was not an easy decision given how hard I tried to avoid that path, and no, I didn't return to TurboTax because I got tricked by one of their dark patterns.
The simple answer for why the tax firms didn't work out is that the work they required in their onboarding equaled or exceeded the amount of work it would have taken me to do the whole thing in TurboTax myself. Mind you, this is just the onboarding piece - not including the emails and calls leading up to the onboarding and following the onboarding.
The least sophisticated firm just said: send us everything in a zip file. That sounded appealing until they started following up with a million questions. The medium-sophisticated firm (which was the most painful of all of them) asked me to use their web app which was essentially TurboTax except that the questions were incredibly confusing so that I had to look up a ton of stuff just to make sure I was submitting the right thing. The third firm used a better web app, but it was still the same thing - the onboarding was essentially the same as just using TurboTax.
The obvious added value with tax firms is that they might catch something that you would have done wrong without their assistance, but these days TurboTax does offer the same service as well (and no, I never received some valuable piece of advice that justified the additional time and effort of working with a tax firm).
TaxAct is not bad, and would be my close second preference. In fact, they actually cover more niche cases (eg: filing certain types of corporate taxes). Even so, their UI/UX is only almost as good as TurboTax but not quite. As unpopular as TurboTax might be in this community, I think we can take a moment and appreciate their PM+UI/UX team, who used some pretty delightful copy and super slick design to turn an awful task into a rather pleasant experience.
And that's the ultimate answer to the OP's question as I see it... most people who are aware of the dark patterns in TurboTax know that it is not the cheapest way to file, but it's certainly not the most expensive either - and if you're looking for the easiest-to-use and fastest method to get the tax report checked off your list, then it's hard to find a better solution (granted, partially because they are helping create the world we live in).
I assume because nobody would file taxes for things that the IRS was absent from their report, because now you know the IRS doesn't know about it and won't be missing it.
I think TurboTax has too many partnerships and offers. It gets people because it's free or only $10 or whatever. It would be pretty easy to switch to other software, like HR Block.
That's not why.
The IRS is underfunded and overworked, so even if it had the information it needed to generate a report for everyone, it still couldn't do it. But it doesn't have that information anyway!
A lot of taxable income is derived from sources that are not reported to the IRS before taxes are filed. This includes things like cost basis for RSUs, state and local taxes (including property tax), and various kinds of investment income. Until 2008, brokers were not even required to report cost basis information to the IRS, which enabled people to easily lie about the amount of their taxable gains!
On top of that, there are a lot of deductions that are based on information the IRS does not have, such as business expenses, moving expenses, etc.
The IRS still largely relies on self-reporting by taxpayers. Anyone with a moderately complex tax situation (e.g. a homeowner, or someone with investment income) knows more about their tax situation than the IRS does!
Assuming the political will to make tax prep easy (which I know does not exist), the fix for this would be pretty simple for Congress to legislate. Sure, it would likely take a few years for all municipalities to come into compliance, but it's not like this would be difficult.
> On top of that, there are a lot of deductions that are based on information the IRS does not have, such as business expenses, moving expenses, etc. [..] The IRS still largely relies on self-reporting by taxpayers.
Sure, but there's no reason why the IRS couldn't have a website where everything it does know is pre-filled, and then could ask you about things they don't know about (and even hint at the kind of things that they wouldn't know).
> Anyone with a moderately complex tax situation (e.g. a homeowner, or someone with investment income) knows more about their tax situation than the IRS does!
Not really? My tax situation is probably "moderately complex": for 2021 I have W-2 income, contractor (1099-NEC) income, interest income, dividend income, capital gains through sales of stock, mutual funds, and bonds, RSU vesting, ESPP purchases and sales, required distributions from an inherited IRA, mortgage interest payments, charitable donations, and state, property, and estimated tax payments. I even have AMT credits I've been carrying forward and using for several years now. There is no reason, in principle, why the IRS could not be unambiguously and correctly notified of all of these things and prepare a return for me.
I hear a lot of "the IRS doesn't know X because Y isn't required to report X"... well... fix that! And I totally agree that the IRS won't know everything sometimes, especially sometimes things that would help lower someone's tax bill (like, say, deductions for business expenses). But there's nothing wrong with that; taxpayers can simply report those extra things during tax season, after doing a quick check to verify that everything the IRS does know is correct. Most other developed nations in the world have no problem with all this; the only thing that's "unique" about the US is our dysfunction.
https://www.propublica.org/article/inside-turbotax-20-year-f...
They are required to report it. Only the current reporting is that an individual is being sent numerous pieces of mail. It could instead be that the IRS gets these (systematically) and sends a person the compiled tax form for validation.
Just the way it works in saner countries like France. Things the tax authority knows are pre-filled, and I'm asked about the rest. So yes, there's no reason besides the fact that many companies would lose their business ( like TurboTax), so they lobby against it.
What about the fact that such a thing would certainly start to eat into Intuit's profits?
You're right--there's no technical reason this couldn't be done. And it should be done. But too much money is greasing too many palms.
As to the OP's question, I don't know why more people aren't steaming mad about it. We're getting taken to the cleaners.
The truth is the IRS doesn't send reports because this country is obsessed with deductions. Your income (which the IRS does know about) is a small factor in the entire equation.
Ironically, under Trump's tax cuts, the standard deduction was made a lot larger (while removing the availability of some deductions). This pissed off the people who loved those deductions, but in the end it made the standard deduction applicable to a lot more people.
If you aren't taking deductions, then you can just use any of the services for free and don't really need to worry about dark patterns.
Free? Haha in what world?
* W-2 income * Limited interest and dividend income reported on a 1099-INT or 1099-DIV * Claiming the standard deduction * Earned Income Tax Credit (EIC) * Child tax credits * Student Loan Interest deduction
basically if you don't sell any assets, have employee stock compensation, or donate a ton of money you can file for free.
2 years ago 37 Million people filed online who were eligible to use an IRS free file offering and only 6.8% did... [1]
[1] https://www.youtube.com/watch?v=7xQQkzWhMOc&ab_channel=Netfl...
[2] https://www.propublica.org/article/turbotax-just-tricked-you...
1) Inverting my answer to “have you sold cryptocurrency” on the forms.
2) Silently removing decimal points (changing 8.005 to 8005 shares in the forms)
3) Persisting an entry for income after I tried to delete it and re-enter, with no way to fix it even after talking to support.
4) Having forms with an overlay “do not use”.
FreeTaxUSA still refused decimal points in the forms (like in item 2) but at least warned me so I could work around it.
A few years ago I benchmarked the two together and they basically gave the same answers. They also don’t hold your past returns hostage.
I’ve been recommending them to everyone that I talk to about taxes.
No you don't. I've sold stock more years than not and I've never needed to do that.
I rant about this all the time with charitable donations. Any behavior the government wants to incentivize through tax policy — charitable donations, student loan interest, IRA contributions should be credits that apply in addition to the standard deduction because otherwise there’s no incentive for most people.
I wonder how many teachers ever benefited enough from itemized deductions to take it?
Teachers came out ahead
I think it's also unfair to say the only standing between us and free file is lobbying. Lobbying doesn't set policy. Congress can still do whatever they want. And it's not like Intuit is keeping free file secret. The IRS hasn't built it. Doing so would cost money, create new bureaucracy and likely face a distrustful public who would rather pay a company then trust the IRS.
I'd say the turbotax approach was easier to fill out, but freetaxusa was much easier to look up additional information when the guidance fell short; when I wasn't sure how to fill out turbotax's questions, figuring out which box it applied to so I could look up more information was supremely frustrating.
Specifically, I was freelancing the previous two years, and I was looking up information about itemized deductions.
> The least sophisticated firm just said: send us everything in a zip file. That sounded appealing until they started following up with a million questions.
That's super weird. Every year I answer a 2-page questionnaire (about 30 yes/no questions), sign an engagement letter and some authorization docs, scan those, zip up all my tax documents, and send them over. My CPA rarely needs to ask any questions of me at all, and sends me my completed return for approval in early April. It's not cheap ($1700), but the peace of mind plus the lack of need for me to do much of anything, is very much worth it. I'm fairly certain I'm saving money overall, but even if my tax bill ended up being exactly the same were I to do it myself, I'd still pay to have it done for me, with a much higher expectation of correctness.
After 6-7 hours of dealing with the most aggressively-incompetent "support" I've ever had the misfortune to encounter, I cancelled every Intuit product/service I was using.
The reason they get away with this type of behavior is because we're all trained to fear the IRS to such a degree that we just want someone else who promises to "take care of everything" for us. And what recourse do we have when they behave badly? The court system? That's just as obfuscated and frustrating as the IRS. How much more of my time and money am I willing to put into dealing with Inuit? By the numbers, the smartest move is to just let this go.
It's everyone just settling for the lesser of evils/frustrations - until they get burnt badly enough.