With tax day behind us, small businesses across the country can finally move on to enjoying the warmth of spring. Unfortunately, the tax system has grown increasingly complex and burdensome for small businesses. According to a 2014 NSBA survey, more than 40% of businesses spend over 80 hours dealing with Federal Taxes. So, who is to blame for the pain small businesses endure year after year?
It’s not (entirely) the government’s fault
You can’t blame the federal government for not trying. However, past attempts by the federal government to simplify this nightmarish process have been futile. There has been no action on President Obama’s proposed legislation on return-free filing or pre-fill tax filings, where the IRS would compute your tax or pre-fill your tax forms based on the information already collected from employers, banks and other institutions.
The party pooper
As with any groundbreaking legislation, there is opposition and criticism. Some say that the already overly burdened IRS is not in a position to take on this monumental task. Others say that the complex US tax laws prohibit such a filing system. With any contentious legislation, it is always interesting and surprising to see who opposes seemingly obvious reform. In the case of return-free tax filing, one of the biggest opponents is the tax preparation software maker, Intuit. According to opensecrets.org, Intuit had paid several million dollars to stymie moves by the government to offer return-free filing. A Forbes story says Intuit had derailed the California’s free electronic filing program and was influential in putting to sleep a similar program at Virginia.
What is Intuit afraid of?
Intuit generates a major chunk of its $4 billion in revenue from sales of TurboTax, its popular tax preparation software package. Intuit certainly has a lot of reasons – over one billion of them - to keep the status quo. If there is a free alternative to Turbotax, Intuit’s ultimate revenue machine will be punctured.
Hey Intuit, leave the government alone
While offering tax preparation software solutions is not a core mission of the government, in this particular case its demanding citizens to comply with a complex tax code, and hence it’s obligated to offer all technological means to reduce this unwelcome burden. The idea of return free filing is not new; In fact, it’s prevalent in European countries like Denmark and Spain.
Resistance to changes in our tax system comes in many forms – no doubt it has been a political hot potato for decades. But, in the case of streamlining the arduous filing process for small businesses, the feet dragging is coming from big business – Intuit. We urge Intuit to allow the government to proceed with return free filing.