IRS drops longstanding promise not to compete against TurboTax

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The Internal Revenue Service's new agreement with the tax-software industry prohibits companies from hiding their free options from search engines and allows the IRS to offer its own tax-return software in competition against TurboTax. That doesn't mean the IRS will offer its own software, but the agency has officially rescinded its promise not to compete against the industry.

As ProPublica reported in April 2019, TurboTax maker Intuit used a robots.txt file to "deliberately hid[e] its Free File page from search engines." TurboTax subsequently changed the code on its Free File page so it wouldn't be hidden from Google and other search engines anymore, but at least five US states opened investigations into TurboTax's marketing and provision of its free tax programs. H&R Block was also hiding its free tax service from Google search using the same method, ProPublica reported at the time, but H&R Block seems to have lifted that restriction based on searches we conducted today.

With the industry under legal pressure, the IRS extracted new promises from Free File, an industry consortium that represents Intuit, H&R Block, and other tax-prep-software makers. The changes were announced by the IRS on December 30 and put into an addendum to the 18-year-old IRS/Free File agreement that requires free services for low- and mid-range incomes.

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