FTC Advice On How To Deal With Equifax Hack: Er... Race The Hackers To Filing Your Taxes Before They Do

from the what-the-actual-fuck dept

So, yes, by now you know all about the whole Equifax hack and how really, really terrible it is. Lots of sites have been posting various stories about what you should do about it, when the truth is you really can't do much. A lot of people are likely going to deal with an awful lot of bad stuff almost entirely because of this leak by Equifax. Not surprisingly, the FTC has weighed in with some suggestions, most of which won't actually help very much. Most of them are the standard suggestions everyone's giving -- including checking your credit reports, putting a credit freeze on your files and basically watching very closely to see if you're fucked over by whoever has access to these files.

But the FTC's very last suggestion is the one I wanted to focus on today. It's basically "um, well, maybe try to file your tax returns early next year, so you beat hackers trying to do the same?"

File your taxes early — as soon as you have the tax information you need, before a scammer can. Tax identity theft happens when someone uses your Social Security number to get a tax refund or a job. Respond right away to letters from the IRS.

As someone who has been a victim of someone filing fake tax returns to try to get your refund, it's a really shitty process to go through. The problem here, though, is the whole setup of our tax system, which makes it pretty damn easy for someone to fake your tax returns -- now made even easier thanks to this breach. If the FTC really wanted to help, it should be pushing for a complete overhaul of how tax filing works, such that merely knowing your Social Security Number and address isn't enough to file tax returns in your name. Among the many problems here, it starts with the idiotic idea that we use SSNs as an identity tool -- but there's also the fact that we continue to have the IRS force every American to play a guessing game with their taxes just to keep tax prep companies like Intuit and H&R Block happy.

I recognize that the FTC isn't directly in a position to fix this, but the fact that it's best suggestion is "race the hackers to filing your tax returns and hope you get there first" should highlight just how totally fucked up our income tax system is in the US.

Filed Under: ftc, hackers, social security numbers, tax returns
Companies: equifax

Majority Of Intuit's Lobbying Dollars Spent Trying To Stop IRS From Making It Easier To File Your Taxes

from the death-and-taxes dept

There has been an effort underway these past few years to make tax season less stressful, less complicated, and less expensive for a large swath of Americans. These efforts have produced plans to make tax season "return free" for many, with pre-populated tax forms prepared by the government that can either be signed if accurate, or ignored if not with a separate filing then being produced by the person in question. That is, since the IRS already should have most of the details on how much you earned from the companies that paid you, it can send you a pre-filled out tax return document, rather than forcing everyone to redo the same work with the same documents hoping that you don't make some mistake that will make the IRS man mad. Again, for those who want to go a different way, they can. But for those who find the IRS's pre-filled documents to be okay, it will make tax filing significantly less of an issue. If you live outside the US, this may sound strange to you, because much of the rest of the world alread does it this way. In a recent episode of Planet Money, the analogy is made that the way we do taxes in the US would be like if credit card companies sent you a "bill" that was a blank sheet of paper, expecting you to fill out all your charges over the past month, and if you got anything wrong, you'd be punished. On taxes, most of the rest of the world the taxes are more like your credit card bill. In the US, it's more like a blank sheet of paper. And, as in years past, some are finally trying to fix things in the US.

This plan has unfortunately run into the extreme distrust of all things government currently weaving its way through America and the gobs and gobs of money from Intuit and H&R Block that is making corporate use of that fear. The lobbying efforts of the tax prep industry has been a multi-year campaign (we've been writing about it since at least 2010) in which money is given to politicians essentially to have them work directly against the interest of their constituents on the subject of paying taxes into the government. It's absolutely bonkers (and partially helped along by anti-tax groups saying that anything that makes paying taxes easier should be stopped because taxes are bad).

But since bonkers is quickly becoming SOP in our government, these lobbying efforts have only ramped up recently, with an increase in dollars spent likely correcting for how simple technology is making tax preparation for most Americans.

Intuit spent more than $2 million lobbying last year, much of it spent on legislation that would permanently bar the government from offering taxpayers prefilled returns. H&R Block spent $3 million, also directing some of their efforts towards the bill. Among the 60 co-sponsors of the bipartisan bill: then congressman and now Health and Human Services Secretary Tom Price.

The bill, called the Free File Act of 2016, looks on the surface to be consumer-friendly. It makes permanent a public-private partnership in which 13 private tax preparation companies — called the “Free File Alliance” —have offered free online tax filings to lower- and middle-income families. The Free File Alliance include both Intuit and H&R Block. But the legislation would also permanently bar the IRS from offering its own free alternative.

There's something especially cynical about a law that is dressed up as a benefit to consumers by creating corporate partnerships making free tax filings available to the constituency, but which likewise prohibit the government from making the collection of its own tax dues more efficient at the same time. This is essentially a jobs program for the tax prep industry, one which that industry has taken to lying to the public through sock puppets in lieu of showing any kind of gratitude. That the industry now has cabinet-level representatives in its bullpen likely means things aren't going to get better for millions of American any time soon.

The reason the industry wants its free filing options codified into law in this way is so that it can upsell the public into paid tax services that it would otherwise not buy and likely doesn't actually need.

In an emailed statement the Free File Alliance’s executive director, Tim Hugo, said that the alliance does not automatically push paid products to those that use the Free File program but the taxpayer does “have the option of ‘opting in’ to receive additional information and offers from the tax preparation company they have selected.”

He said that the lack of awareness of the program is “unfortunate,” and placed blame on the IRS. While the tax agency previously had a large budget to advertise the Free File program, “today that budget is $0, making it difficult to reach the general public,” he said.

While it is indeed a crying shame that the IRS budget to pimp private businesses to the public has been reduced in this manner, it's arguable more of a shame that lobbying money has kept tax season more complicated and costly than necessary. That the industry is spending money to keep a voluntary option for the public beyond reach in favor of upselling that same public is all the more so.

Filed Under: free file, irs, lobbying, ready return, tax returns, taxes
Companies: h&r block, intuit

Trump Campaign Threatens To Sue NY Times For Sharing His 1995 Tax Returns

from the that's-not-how-this-works dept

It's kind of amazing how quickly Donald Trump's lawyers seem to threaten any media outlet for publishing information about him that he doesn't like. The latest target is the NY Times which ran a big story over the weekend with some leaked pages of his 1995 tax returns, suggesting that the guy who repeatedly claims he's great at business, reported personal losses of $916 million. We'll leave the analyzing of the tax returns to those who do that sort of thing (though I will recommend reading this analysis, which suggests that it's likely a key part of the NYT article is wrong concerning Trump's ability to use those losses to avoid taxes for 18 years), but we did want to focus in on something more relevant to what we discuss here at Techdirt. The legal threat that the Trump campaign sent to the Times in response:

Separately, a lawyer for Mr. Trump, Marc E. Kasowitz, emailed a letter to The Times arguing that publication of the records is illegal because Mr. Trump has not authorized the disclosure of any of his tax returns. Mr. Kasowitz threatened "prompt initiation of appropriate legal action."

Unlike most of the nine other times (at least) during this campaign that Trump has threatened to sue a media property for their reporting, this one may at least have some tiny marginal legal basis -- though it's certainly not a slam dunk. What is true is that publishing someone's tax return without authorization is a federal crime.

But, it's not that simple. The NY Times would have a pretty strong First Amendment defense that what they're doing here is very much in the public interest. After all, Trump himself has made his tax returns (and his supposed acumen as a business man) an issue in this campaign by refusing to release them, despite every other major party candidate for President releasing tax returns going back decades (and even Trump himself mocked Mitt Romney for taking too long to release his own tax returns in 2012). So there's no argument here that this isn't newsworthy. It clearly is, and that certainly helps the NY Times's case. To me it seems like it should be a clear First Amendment win for the Times -- and plenty of others agree.

Plus, there's the fact that if Trump actually did sue, he'd have to admit the returns are really his and are accurate.

On top of that, Trump himself is regularly talking about getting information out there that hasn't been disclosed through authorized means. Remember, he's "joked" about asking hackers to release Hillary Clinton's emails. And just a few days ago, he tweeted for people to go searching for a former Miss Universe's sex tape in order to discredit her comments about how Trump had treated her.

Who knows if Trump is seriously going to pursue legal action -- in the past he's happily admitted to filing SLAPP lawsuits designed to cost whoever he sues money, even if he knows there's no chance of succeeding -- but if he does, it could become a pretty important First Amendment case... from someone who has already made it clear that he has no respect at all for the First Amendment.

Filed Under: donald trump, first amendment, lawsuit, tax returns, taxes, threats
Companies: ny times

Elizabeth Warren Introduces Bill To Make Tax Season Return-Free

from the intuit-ive-thinking dept

Yay, it's tax season again! As our American readers will know, this is the wonderful time of year when we scramble to get all of our taxes and deductions paperwork in order, take them to some storefront that looks like a military recruitment center, push all of those papers in front of someone that looks like they just graduated from college, and scream, "You figure it out!" For our foreign readers, I should explain that we do this because our tax code is more complicated than the plot of Game of Thrones, our tax authorities are every bit as ruthless as that same series, and we've collectively allowed our citizens' payment of due obligations to become a for-profit industry. But seriously, though, come to America. It's great. I swear.

Several times in the past, some members of our government have attempted to lessen the burden we bear to pay our taxes. It never seems to work because the industry that makes money off of this tax system -- the tax preparation people and software makers -- lobbies to keep filing free taxes a pain in the ass, directly scaring the public into thinking the government will over-charge them, and then indirectly and unethically having sockpuppets do the same. It's in this way that you have a free-to-file federal tax program that roughly two-thirds of the public would be perfectly qualified to use, instead only being used by 3% of the population. 'Merica!

Well, Elizabeth Warren and seven co-sponsors would like to change that by simply eliminating the need for returns entirely for a significant number of people.

On Wednesday, the Democratic senator introduced a bill with seven cosponsors, including Democratic presidential candidate Bernie Sanders, seeking to make significant reforms to the Internal Revenue Service (IRS). Under the bill, Americans with simple tax obligations would have the option not to complete a tax return at all, but to instead receive a pre-prepared return from the IRS with their liability or refund already calculated for them. The IRS already gets most employer and bank information on taxpayers’ obligations — such as W2s and interest earned — so all it would have to do is calculate what they would owe for them.

For others with more complex situations — those who want to itemize their deductions or with many dependents who have to provide more information — the bill would direct the IRS to develop a free, online preparation and filing service that would allow everyone to file directly with the government, rather than relying on third party filing services like TurboTax or H&R Block. And taxpayers would be able to download the tax information the IRS already has.

In other words, have the IRS, which will be evaluating these people's returns anyway, simply do all the math for most of the simple tax returns. We're not talking about returns that would legitimately make use of deductions; we're talking about very simple tax returns, which is what most people have filled out by tax preparers or tax software anyway. Now, this is usually where someone will make the obvious point: the government doesn't deserve to be entrusted with this math. And, hey, I take that point seriously. The government has certainly shown its capacity to lie and deceive. But so has the tax-prep industry. Intuit has been guilty of all kinds of underhanded attempts to keep people from being able to file for free. They are proven deceivers, too.

In addition to that, this bill is directly setting its sights on the cozy relationship the IRS has with the tax-prep industry, so anti-governmenters should really think about getting on board with this.

The bill would also prohibit the IRS from entering into agreements that would restrict its ability to provide such free, online services directly to taxpayers. The IRS has signed a number of binding agreements with the tax preparation industry over the years that blocks it from offering free services directly to taxpayers itself, saying that it will “not enter the tax preparation software and e-filing services marketplace” and “not compete” with private service providers. The IRS’ declarations that it won’t enter the tax preparation space fly in the face of what it’s been mandated to do. In 1998, Congress passed a bill requiring the Treasury Department to develop a “return-free” tax system by 2008 for those with simple obligations, computing what those people owe with information the IRS already has. Yet Warren’s office argues that the IRS has instead turned control of the process over to private tax preparation companies.

When a government institution rebukes its public duties in favor of corporate wishes, there's a word for that. And it's that corporate control that will be pushing back on Warren's bill. The tax-prep industry, after all, has spent nearly $30 million in lobbying Congress since the late nineties. We're all about to get a very real lesson on the effect of corporate lobbying on a Congress that is ostensibly designed to serve the public need. I suspect the results will be as instructive as they are ugly.

Part of the solution to this is, of course, a simplified tax code. But it's somewhat strange to see some in favor massive tax reform, including simplifying the tax code, come out against simplifying filing tax returns or eliminating returns entirely.

Yet some anti-tax groups that say they want a simpler tax code have fought against these efforts. Grover Norquist, founder of Americans for Tax Reform, has testified and advocated against a return-free system. Republican presidential candidate Ted Cruz has consistently called to abolish the IRS, rather than get on board with plans to direct the agency to make things easier for taxpayers.

Some of that sentiment is likely coming from a worry that a simplified filing system would lead many people to be less angered by the overall tax system, and thus less interested in more radical reform. And some is likely born of a deep-seeded mistrust of government in general and the IRS in particular. Which, again, I completely understand. But it would be wise for the listeners of those mouthpieces to truly understand what this legislation would accomplish, because it's largely built around eliminating returns for filers with returns so simple that charging to file them is downright silly.

Filed Under: elizabeth warren, irs, regulatory capture, tax returns, taxes
Companies: intuit

Intuit Does Subterfuge To Combat Free-Filing Tax Returns

from the sneaky-sneaky dept

It's tax time again, when we all turn just a bit more Republican for a month or so, curse out the inept government that asks us to pay for all that they do, and emote a general grumbling attitude throughout the days. Fun, right? Part of what makes this time of year such a royal pain in the ass is that many of us pay to pay our taxes, using any number of accounting and tax prep services just to keep Uncle Sam off our backs. Last year, we wrote about how Intuit, the company behind TurboTax, was actively waging a campaign against the government free-filing program, in which the IRS offers to fill out much of the paperwork and allow citizens to e-file their taxes with minimal input. The program is entirely voluntary, but that didn't stop Intuit from raging against the machine, suggesting that the IRS would overcharge the poor and that the program would, like, really hurt their business (honesty!).

It turns out that trying to stifle people's ability to simplify their own lives and file their taxes for free wasn't all that great for the old public relations department, however, so Intuit has instead decided to go the sneaky route and get a bunch of unwitting mouthpieces to do it for them.

Over the last year, a rabbi, a state NAACP official, a small town mayor and other community leaders wrote op-eds and letters to Congress with remarkably similar language on a remarkably obscure topic. Each railed against a long-standing proposal that would give taxpayers the option to use pre-filled tax returns. They warned that the program would be a conflict of interest for the IRS and would especially hurt low-income people, who wouldn't have the resources to fight inaccurate returns. Rabbi Elliot Dorff wrote in a Jewish Journal op-ed that he "shudder[s] at the impact this program will have on the most vulnerable people in American society."

So you're wondering where the problem in all of this is? Well, it turns out these folks didn't just independently decide to write the same op-eds. It would appear that they were approached by groups affiliated with Intuit and asked to write them. The folks targeted weren't informed of the connection, either.

Rabbi Dorff says he was approached by a former student, Emily Pflaster, who sent him details and asked him to write an op-ed alerting the Jewish community to the threat. What Pflaster did not tell him is that she works for a PR and lobbying firm with connections to Intuit, the maker of best-selling tax software TurboTax.

"I wish she would have told me that," Dorff told ProPublica.

You think? What once appeared to be some kind of grassroots campaign by the concerned public towards what might be a real issue suddenly has devolved into a public relations blitz undertaken through dishonest means by corporate interests. In other words, it's the same message we got last year, and from the same source, but that source is hiding behind unwitting accomplices. The underhanded deeds weren't over, however.

The website of Pflaster's firm, JCI Worldwide, had listed Intuit among its clients, but removed it after ProPublica contacted them. Pflaster said Intuit had been listed by mistake....

That's quite an error to make and quite a coincidental time for that error to be "corrected." And, while Intuit's only comment on the matter was some general mumblings about how they use multiple avenues to improve "tax empowerment" of the public, it's a special kind of shady that refers to demonizing an entirely optional and free government service as empowerment of the public. Meanwhile, of course, Intuit has lobbied heavily on bills related to free-filing.

In the end, there may indeed be flaws in the government's free-filing program and process. Actually, it'd be a bit of a shock if there weren't flaws. But it's voluntary, and the solution to those flaws is most certainly not subterfuge and dishonest attempts to coerce a public through their religious leaders.

Filed Under: lobbying, op-eds, propaganda, subterfuge, tax returns
Companies: intuit, jci worldwide

Intuit Lobbying The Government To Make It More Difficult To File Your Tax Returns

from the isn't-that-special dept

A fascinating article points out that the government could make the process of filing your tax returns significantly easier by simply sending you pre-filled out forms of what they know (basically what's been sent in from your employer(s)) so that you could just take the pre-filled form, check it over, make any additions or changes as necessary and submit it. Apparently, many places that have done this have had great success with it. But it's not happening in the US in large part due to heavy lobbying from Intuit, who fears (perhaps correctly) that this would put a big dent into its tax preparation software business. Of course, that's not how Intuit puts it. The company first claims that this functionality is "already available" (it's not) and that it is a "conflict of interest for government to be both tax collector and tax preparer." However, that is also inaccurate. No one is asking the government to be the tax preparer, but just to share the information it already has so that individuals aren't forced to rebuild the info themselves. As one person quoted in the article notes, it's "as if Visa sent customers a blank piece of paper, requiring that they assemble their receipts, list their purchases -- and pay a fine if they forget one." So, everyone, thank Intuit for making tax season that much more frustrating.

Filed Under: data, filing, government, lobbying, tax returns, taxpayers
Companies: intuit

IRS Employees Caught Snooping On Tax Returns

from the nice-to-see-someone's-checking dept

Last week, in writing about the Italian government's defense of its decision to put everyone's tax returns online for everyone else to see, we noted the bizarre statement by the official who made the decision: "In the USA, tax filings are already public, check any American TV-movie and you'll see." This totally false statement didn't get much play in the American press (someone in the comments suggested that maybe it seemed so unbelievable that the press thought he was joking). However, as if to make it painfully clear how false this statement actually is, five IRS employees have been charged for snooping on tax returns they were not authorized to look at. While it is a little troublesome that IRS employees were able to do this in the first place, it's at least somewhat comforting that the IRS's auditing system seems to be able to catch people doing this, even when they're only looking at a very small number of unauthorized returns (each worker only looked at one to four unauthorized returns).

Filed Under: audits, irs, snooping, tax returns