IRS stops firms like TurboTax from hiding free tax-filing products in searches

The Internal Revenue Service on Monday announced a new tax filing agreement that prevents companies from hiding free products from internet searches. The move is designed to make it easier for taxpayers to find and use free online tax-filing software. 

Taxpayers making less than $69,000 a year can file their taxes for free, but ProPublica reported in April that Intuit, which makes TurboTax, makes it difficult for people to find the free option. Instead, searches for terms like "irs free file taxes" directed potential tax filers to paid versions of Intuit's service, according to the publication. 

The IRS previously agreed not to make online tax filing free as long as tax-preparation companies, which make up an industry group called the Free File Alliance, offer free services to taxpayers making less than $69,000. But finding those free services was often a challenge.

Now an addendum to the Memorandum of Understanding between the IRS and the Free File Alliance prevents companies from "engaging in any practice" that would hide Free File options from "an organic internet search." In addition, the IRS is no longer prohibited from creating its own online filing system. 

"This updated agreement is part of a larger effort by the IRS to help taxpayers meet their tax obligations," IRS Commissioner Chuck Rettig said in a release. "It continues to show the partnership we enjoy with the Free File partners and the commitment we both share in helping taxpayers since the program's creation 18 years ago. The improved process will make Free File stronger and give taxpayers another reason to consider this valuable software option."

Companies like Intuit have lobbied for years to block the IRS from building its own free online tax filing system because it would compete with their products, according to ProPublica. Members of Congress reportedly pushed to prevent the IRS from offering free online filing.

In a Monday blog post, Intuit said it "strongly supports these changes to the Free File program and associated Free File offerings because they increase the focus on the taxpayer experience. We applaud the IRS and FFA, who worked together to bring about these important reforms."