||This article may contain improper references to self-published sources. (December 2013)|
TurboTax is an American tax preparation software package developed by Michael A. Chipman of Chipsoft in the mid-1980s. Intuit acquired Chipsoft, based in San Diego, in 1993. Chipsoft, now known as Intuit Consumer Tax Group, is still based in San Diego, having moved into a new office complex in 2007. Intuit Corporation is headquartered in Mountain View, California.
There are a number of different versions, including TurboTax Deluxe, TurboTax Premier, etc. TurboTax is available for both federal and state income tax returns. The software is designed to guide users through their tax returns step-by-step. The TurboTax software provides taxpayers additional support for their self-prepared returns by offering Audit Defense from TaxResources, Inc.
Typically, TurboTax federal software is released late in the year and the state software is released mid-January to mid-February. TurboTax normally releases its new versions as soon as the IRS completes revisions to the forms and approves the TurboTax versions, usually late in the tax year. The process is similar for states that collect income taxes.
In 2001, TurboTax saved financial institution passwords entered by users to servers at Intuit and the home computer. The programming error was reportedly fixed, but as of 2012 Turbo Tax offers no option to download a data file directly from the financial institution. Instead, it prompts the user for their login name and password at the financial institution or permits the data to be entered by hand.
In 2003, Intuit faced vocal criticism for its TurboTax activation scheme. The company responded by removing the product activation scheme from its product. In 2005 TurboTax extended its offering by allowing any taxpayer to use a basic version of its federal product for free as part of the Free File Alliance. By 2006 that offer has been limited to free federal online tax preparation and e-file for taxpayers whose adjusted gross income is $28,500 or less (or $52,000 for those in the military) and those 50 or under. TurboTax has received a number of complaints regarding its advertising of the free version. For filers who use this basic version of the software, federal filing is free. However, state tax filing is not free, and the cost of using TurboTax to file state returns is not presented to the user until they've already completed entering their information for federal returns.
In 2008, Intuit raised the price of TurboTax for desktop customers by $15 and included a free e-filing for the first return prepared. The company's new "Pay Per Return" policy was criticized for adding a $9.95 fee to print or e-file each additional return after the first, including returns prepared for members of the same household. On December 12, 2008 the company announced that it had rescinded the new policy.
On January 21, 2009, TurboTax received considerable public attention at the Senate confirmation hearing of Timothy F. Geithner to be the United States Secretary of Treasury. Geithner had testified that he used TurboTax to prepare his tax returns for the years 2001 to 2004 but had incorrectly handled the self-employment taxes due as a result of his being employed by the International Monetary Fund. Geithner made it clear that he took responsibility for the error, which was discovered in a subsequent IRS audit, and did not blame TurboTax. Geithner paid $42,702 in back taxes. Intuit responded by releasing a statement saying "TurboTax, and all software and in-person tax preparation services, base their calculations on the information users provide when completing their returns."
TurboTax Estimated Taxes
TurboTax Estimated Taxes is an online estimated income tax payment calculating and filing service. For taxpayers who file quarterly estimated payments, it provides payment calculators and allows e-filing of estimated tax payments. Automatic deadline reminders help users avoid late payments. The record of past payments can be automatically imported into TurboTax at tax-filing time, which saves the trouble of typing in that history.
Intuit also addresses Canadian tax returns with an entirely separate product also named TurboTax, but previously called QuickTax. The French version has retained its original name, ImpôtRapide.
Writing to the boot track
The 2003 version of the TurboTax software contained digital rights management that tracked whether it had previously been installed on a computer by writing to sector 33 on the hard drive. This allowed it to track if it was on a computer previously, even through reinstalling the operating system. This also caused it to conflict with some boot loaders that store data there, rendering those computers unbootable.
Opposition to return-free filing
Intuit, the owner of TurboTax, spent more than $11 million on federal lobbying between 2008 and 2012. Intuit "opposes IRS government tax preparation," particularly allowing taxpayers to file pre-filled returns for free. The company also lobbied on bills in 2007 and 2011 that would have barred the Treasury Department, which includes the IRS, from initiating return-free filing. An Intuit spokeswoman said in early 2013 that "Like many other companies, Intuit actively participates in the political process." She said that return-free filing had "implications for accuracy and fairness in taxation."
In its 2012 Form 10-K, Intuit said that "We anticipate that governmental encroachment at both the federal and state levels may present a continued competitive threat to our business for the foreseeable future."
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