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'Millionaires, Corporations? They're Not Going to H&R Block': Janine Jackson ([link removed])


Janine Jackson interviewed Color of Change's Portia Allen-Kyle about predatory tax preparers for the February 21, 2025, episode ([link removed]) of CounterSpin. This is a lightly edited transcript.

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TurboTax: Inside TurboTax’s 20-Year Fight to Stop Americans From Filing Their Taxes for Free

ProPublica (10/17/19 ([link removed]) )

Janine Jackson: April is nominally tax season, but right about now is when many people start worrying about it. That's why TurboTax paid a heck of a lot of money for Super Bowl ads ([link removed]) to hard-sell the idea that people could use its service for free ([link removed]) —if they hadn't used it last year, or if they filed by a certain date.

But if free, easy tax-filing is possible, should it be a gift to taxpayers from a for-profit corporation, from a corporation that has already been fined ([link removed]) for unfairly charging lower-income Americans, from a corporation that has aggressively lobbied ([link removed]) for decades to prevent making tax filing free and/or easy?

Our next guest has looked into not just the top-down inequities of the tax preparation industry—described ([link removed]) by one observer as the "wild, wild West"—but how those problems fall hard on Black and brown and low-income communities.

Portia Allen-Kyle is interim executive director at Color of Change ([link removed]) . She joins us now by phone. Welcome to CounterSpin, Portia Allen-Kyle.

Portia Allen-Kyle: Thank you so much. Happy to be here.
Preying Preparers: 1Preying Preparers: How Storefront Tax Preparation Companies Target Low-Income Black and Brown Communities

Color of Change/Better IRS (3/24 ([link removed]) )

JJ: I want to ask you about the report you authored, called “Preying Preparers.” ([link removed]) I believe that many, if not enough, people have a sense that poor, low-income folks are at the sharp end of tax policy generally, and tax-filing specifically—that rich people get to keep, not just more money, but a higher fraction ([link removed]) of money than low-income folks, who have less money and who need every nickel of it.

But I'm not sure that people understand, that isn't just the capitalism chips falling where they may. Your report says, “Exploiting low-income taxpayers is core to the business model of tax prep companies.” Tell us what we might not know about that.

PAK: Doing that report was so eye-opening for so many different reasons, both personally and professionally, at Color of Change, in our advocacy. I remember years ago, when I discovered after going to H&R Block, and paying more than $300 for a fairly simple return, and finding out that the person who filed my return wasn't even an accountant. And I remember how ripped off I felt.

So fast forward, being in this role and doing this work, and this report in particular, just going into how much of a scam the tax preparation industry is, both the storefront tax prep companies—so your H&R Block, your Liberty Tax, your Jackson Hewitts of the world—as well as large corporations, such as Intuit and other software providers, that provide these tax-filing services.

And the reality of the situation is that you have an industry that has spent hundreds of millions of dollars ([link removed]) preventing people from being able to either pay the government what they owe or, in many cases, receive money back from the government that is technically already theirs. They have earned it, the government has kept more of it than they were perhaps entitled to, and now people are in the position for a refund.

And these businesses, especially for Black taxpayers, for low-income taxpayers, have found ways to profit off of people's already-earned money, by inserting themselves as these corporate middlemen in the tax preparation game, where their sole role is to fleece people's pockets, either from the money that folks have already earned and they are due as a refund, or by upcharging, upselling and preying upon folks who are eligible for certain tax credits, such as the earned income tax credit or the child tax credit, and have made businesses off of selling the equivalent of payday loan ([link removed]) products to these taxpayers, where they take a part of their refund and just give people the rest, under the guise of giving them a same-day advance or same-day loan. And so no matter what the angle is, it is all unnecessary and all a scam. And it's why government products like IRS Direct File
([link removed]) are so important to both our democracy, how government works, and how people receive and keep their money.

JJ: A key fact in your report is that the tax preparation industry has these basic competency problems: Tax laws change all the time. You're looking for someone who can make sure you pay what you're supposed to, and look for any benefits you're entitled to. And, of course, throughout this is that the most vulnerable people are the most in need of this help. But an unacceptable number, if we could say, of these tax preparers are not required to really prove that they know how to do it. That's an industry-wide failing.

PAK: Oh, absolutely. There are no real requirements ([link removed]) for tax preparers in these companies. Whereas if you go to an accountant, accountants have professional standards, they have training requirements. Not anybody can hang up a shingle and say, “I am an accountant,” in the same way that not anyone can walk into a hospital, put on a white coat and say, “I am a doctor.” But what we have is an entire industry of people that are able to say, “I am a tax preparer, because I have applied for a job, maybe taken an internal training to these companies, and am now in the business of selling tax preparation.”

JJ: But not to everyone, because let's underscore that, the fact that these systemic problems, this is a regulatory problem, clearly, but it doesn't land on everyone equally, and it's not designed to. And so in this case, you see that these unregulated tax preparers are taking advantage of, well, the people that it's easiest to take advantage of. Talk a little bit more about the impacts of that particular kind of predation.
Portia Allen-Kyle

Portia Allen-Kyle: "It's these tax-lobbying corporations that have fought so hard to keep taxes complicated and confusing for the rest of us."

PAK: One of the ways in which especially storefront preparers are able to prey on communities is simply by location. And so many of these franchise operations, some of them maintain year-long locations, many of them do not, but they pop up, kind of like Spirit Halloween, often around tax season, in neighborhoods that are disproportionately Black or communities of color, disproportionately lower income, disproportionately taxpayers and residents who are eligible for what are expected to be larger refunds, so those who are eligible for the earned income tax credit, those who are eligible for the child tax credit, and really prey upon those folks in selling tax preparation services.

And the key here is selling tax preparation services, because what they really are are salespeople. They have sales goals, it's why they're incentivized to upsell products, some of the products that they're also selling are refund anticipation loans ([link removed]) . So they may lure you in and say, “Get a portion of your refund today,” or “Get an advance upfront.” That's an unregulated bank product. So you have an unregulated tax preparer now selling you an unregulated loan product, that often sometimes reach interest rates of over 30%. And they know what they're doing, because that is where they make their money, in the selling of product.

And we see that in the data, that free programs such as VITA ([link removed]) , the Volunteer Income Tax Assistance program, disproportionately prepares the taxes of filers who don't have children, and aren't eligible for EITC. So many of these companies will refer out other folks, for whom they find that it is not worth it to prepare their taxes, prey on folks that they think they're getting big refunds, but more importantly, what really illustrates the difference in tax preparation and expectations: the wealthy millionaires, billionaires, corporations, they're not going to H&R Block. Mark Cuban is not walking into H&R Block to file his taxes, right?

Folks on the other end of the income and wealth spectrum are relying on accountants, are relying on folks who are not just preparing a service in the moment, but who are providing year-round advice on how to make the system work for them.

And so there's a service and an additional amount of financial insight and oversight that they are getting, that an entire segment of the market is not, when tax prep is handled in this way. Because, at the end of the day, it's these tax-lobbying corporations that have fought so hard to keep taxes complicated and confusing for the rest of us, doing this while providing services that they know are subpar in quality, and deliver questionable outcomes. I mean, demonstrated in the report, the error rate of those who prepare taxes for companies like H&R Block, Liberty Tax, Jackson Hewitt and other companies is extremely high, sometimes upwards of 60% ([link removed]) . So you have a scenario where you have a portion of taxpayers who disproportionately have their returns prepared by preparers who are unqualified and unregulated, and essentially increases their risk of an audit.
NPR: IRS chief says agency is 'deeply concerned' by higher audit rates for Black taxpayers

NPR (3/16/23 ([link removed]) )

And then, when they are audited—it was found that the IRS disproportionately has audited Black taxpayers ([link removed]) , and particularly those who are eligible for EITC, etc. And that is not unrelated to the way that it is structured, and the predation of the corporate tax lobby in the first place.

And while it sounds like, when you see advertisements from H&R Block or Intuit about how they stand by and guarantee their services, they'll defend you in an audit. Well, they need to defend you in an audit. It's not altruistic. You'll need that protection, because they're going to mess it up, and have messed it up, for so many people.

And that part of the story is not often talked about, when we talk about the disproportionate audit rate. It often is not always included how those folks had their returns prepared. And that's often by these same companies that are presenting and fighting against things like direct file, which is essentially the public option for taxes, in the same way that the Affordable Care Act is the public option for healthcare.

JJ: What is direct file, and why can we expect to hear in the media a lot of folks saying, “Oh, well, you might think direct file is good, but actually…”? What should we know about it?

PAK: What we should know about it is, as I mentioned, direct file ([link removed]) is the public option for taxes. And it's important, because it allows people to file returns, simple returns, directly with the IRS. So last year, the pilot program was only available in 12 states. This year, the program is open to folks living in 25 states. We hope to see and are fighting for the expansion ([link removed]) after this season into all 50 states, and recognize the tough road ahead for that.

But it is a program that, in its first year, saved over, I believe it was 130,000 taxpayers, millions of dollars and hundreds of thousands of hours in tax preparation. And already we’ve seen folks flock this season to the direct file system. And in the first two weeks, Color of Change has been doing a lot of advocacy; we are the top referrer of traffic to direct file. And so we're already saving hundreds of thousands of dollars, and thousands of hours, which is a real benefit to community. This is a system that is government working for you.

It's also important, because the other thing that private companies have really invested in, and fought so hard about, is that even when you file with H&R Block, when you file with Intuit or TurboTax, when you file with Liberty Tax, that information is still going to the government, to the IRS. But now it also is housed in this private corporation that essentially uses it as a part of their business model, to sell other products to you and prey on you in other ways.

And so it's not a coincidence that a company like Intuit owns TurboTax, which is a software platform that will take up your data. They also own QuickBooks, so they have a bunch of data on small businesses that keep their accounting in that way. They own MailChimp, and so they have information of millions of folks who join direct marketing email campaigns, and so they can link data in that way. And then they also own Credit Karma. And so for those who are looking to improve their credit scores, for example, they also then have information about Americans in that level. And match this to essentially prey in different ways, with different types of tax products and other banking products.

And we've seen this in the expansion of fintech tax product loans that has been going crazy. When Cash App, for example, is telling you ([link removed]) that you can file your taxes for free, you should assume that you are the product. And cutting out that corporate middleman is critical and essential, for not just ensuring that families keep money in their pockets, save time, that they are able to put back, spend with their kids, spend with their families, spend pursuing other things, but also is a data protection ([link removed]) strategy as well.

JJ: We've been speaking with Portia Allen-Kyle, interim executive director at Color of Change. The report, “Preying Preparers: How Storefront Tax Preparation Companies Target Low-Income Black and Brown Communities,” can be found at ColorOfChange.org ([link removed]) . Portia Allen-Kyle, thank you so much for joining us this week on CounterSpin.

PAK: Thanks for having me.
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