The IRS Free File program lets roughly 70 percent of American taxpayers — anyone earning under about $84,000 — file federal returns at no cost through partnered software providers. In practice, the share who actually use it has hovered around 3 percent for years. That gap isn’t an awareness problem in the ordinary sense. It’s the result of a deliberate, documented effort by major tax preparation companies to hide the free option from the people legally entitled to use it.
The hidden landing pages
A 2019 ProPublica investigation showed that Intuit, the parent of TurboTax, had configured its free filing landing page so that search engines couldn’t index it. Users who searched “TurboTax free” were routed instead to the company’s commercial Free Edition, a similarly named product that pushed paid upgrades for routine situations like student loan interest or unemployment income. H&R Block did similar. After regulatory pressure, the IRS modified its Memorandum of Understanding to bar this practice. Intuit then exited the Free File program entirely in 2021. The Federal Trade Commission later ruled that Intuit’s advertising of TurboTax as free was deceptive, and Intuit agreed to a $141 million multistate settlement in 2022 with no admission of wrongdoing.
The lobbying machinery
The Free File deal was originally structured in 2002 as a bargain: industry would offer free filing to most Americans, and in exchange the IRS would not build its own free direct-filing tool. That arrangement was renewed for years, locking the government out of competing with the very companies that were sabotaging the program. Industry lobbying spending was substantial — Intuit alone spent more than $40 million on federal lobbying over two decades. The Inflation Reduction Act of 2022 finally funded a pilot for IRS Direct File, which launched in 12 states for the 2024 filing season and expanded in 2025. Industry response has been to argue, repeatedly, that taxpayers don’t actually want a government filing option, while simultaneously fighting to limit its scope.
What it costs you
Most filers in the eligible income range pay between $40 and $200 to file returns that should have been free. Multiplied across the population, that’s billions of dollars annually moving from low- and middle-income households to a small number of software vendors. The companies that did this faced settlements, not criminal liability. No executive was prosecuted. The settlement amount was a fraction of the revenue the practice generated. Whatever you think about the merits of public versus private tax preparation, the relevant fact is that there were no consequences proportionate to the scale of the harm, which is why nothing about the underlying incentives has changed for the next round.
The bottom line
If your income is under the Free File threshold, use the IRS Free File portal at irs.gov directly — not a tax software ad you found through search. Try Direct File if you’re in an eligible state. The product you’ve been buying for years was usually free, the company knew it, and the regulator that should have noticed was contractually prevented from building an alternative. That’s the system, and it took twenty years to crack open.
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