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Congress has approved billions of dollars of checks for Americans hard hit by the biggest round of layoffs in U.S. history. But millions of Americans will have to wait months for that money — and millions more may never get the money at all.
That’s because the rescue legislation left it to the IRS, an agency gutted by Congress, to organize the complex logistics of delivering the money to those entitled to it. As the IRS has struggled, for-profit tax preparation companies, notably Intuit, the maker of TurboTax, have stepped in with websites to help people get their checks.
But Intuit is not just acting as a conduit: It is also misleading unwary Americans by steering them to paid services that they could otherwise get for free.
The job Congress gave to the IRS in its $2 trillion CARES Act is seemingly straightforward: Identify the Americans who qualify and send them money. This turns out to be far more complicated than it sounds.
Tens of millions of Americans have not provided the IRS with their banking account information, if they have one. Some of these people have filed taxes, so they should eventually receive money but will have to wait weeks or even months for a check to come in the mail.
Another group of Americans did not file taxes because they make so little money. Getting stimulus checks to them, an estimated 6 million households, is challenging. They now must file a new form online notifying the IRS who they are, or the tax agency has to find them. If they don’t, these people will never get the checks of $1,200 and up.
The CARES Act, passed in late March, did not provide any mechanism to reach many of these low-income Americans. So far, the extent of the IRS’ public outreach has been the creation of what the agency calls “e-posters,” to be circulated online, describing the program and letters written by the commissioner to several nonprofits encouraging them to get involved.
Intuit has had a much more nimble approach. On April 4, the company rolled out a new “stimulus registration product” as part of its new Coronavirus Tax Center. But the site, marketed as “free,” sometimes steers customers into products that cost money, in the same way ProPublica has documented over the past year. What’s more, customers who use it are signing away their personal data to the Silicon Valley firm, which the company can use to pitch third-party financial products to their customers.
The coronavirus rescue checks are yet another manifestation of a problem that has existed for decades. As ProPublica has documented, the IRS has long deferred to private industry instead of creating its own tax preparation and filing apparatus. The result has been that millions of Americans have paid billions of dollars to corporations for tax preparation they should have been able to get free of charge. This year, anyone who made under $69,000 does not need to pay to file; they are eligible to file taxes for free through an IRS program called Free File.
Now, Americans who desperately need checks to help cushion the coronavirus crash are being targeted by companies all over again.
“This vulnerable group of Americans might end up having to pay for tax prep that they could get for free,” said Dennis Ventry, a tax law professor at University of California, Davis. “And this is a treasure trove of data for Intuit. The company can harvest the personal data of people who previously made up a universe of Americans that the tax prep companies didn’t interact with.”