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A government competitor to Intuit’s TurboTax may be more likely now than it’s ever been

- Brody Ford and Ben Steverman

In almost every wealthy country, governments offer a free way for citizens to calculate what they owe in taxes. A notable exception is the US, where online tax prep is a big business dominated by TurboTax owner Intuit Inc., which has maintained its position despite an onslaught of lawsuits and public criticism. But the threat of a publicly run competitor, which has been bubbling under the surface since the internet’s early days, may be more serious than ever.

The Inflation Reduction Act, which President Joe Biden signed last August, includes nearly $80 billion to modernize the Internal Revenue Service and for the first time requires that the agency study whether it can build a tool that might replace products such as TurboTax for millions of Americans. An academic consultant enlisted for the study, due in May, has in the past advised that the IRS adopt “the most expansive version of a direct e-file program.”

Wall Street analysts still think the chances of the government building such a filing system are so remote that they don’t even factor it into their models. But dissatisfaction among regulators is keeping the pressure on. Officials have accused TurboTax of tricking low-income customers into paying for services that it describes as free, while journalists and even stand-up comedians have detailed the ways Intuit has fought to stop government initiatives.