Menu
Tax Notes logo

IRS-Intuit Nonfiler Portal Sparks Commercialization Concerns

Posted on Apr. 17, 2020

The IRS’s new portal for nonfilers to update their direct deposit information is raising eyebrows among some in the tax community worried about information privacy and security.

“It’s a legitimate concern that people should look at, and before they use the direct Intuit tool, or any other tool, they should satisfy their concerns first,” said James E. Lee of the Identity Theft Resource Center. “It’s especially important that . . . security and privacy provisions be implemented.”

The IRS unveiled its new “Non-Filers: Enter Payment Info Here” website April 13 to speed coronavirus economic stimulus payments to those who don’t have current direct deposit information on file with the tax agency. Treasury will send paper checks to those without bank information, but that process could take months.

“The nonfiler tool is secure, and the information entered will be safe,” the IRS said in a statement to Tax Notes April 15. The process automatically completes a simple Form 1040, which is transmitted to the IRS for calculation and payment of the economic stimulus, the agency continued. “Using the tool to get your payment will not result in any taxes being owed.”

But taxpayer advocates wondered whether the rush to get money into needy hands had eclipsed the need for IRS oversight. “Based on the oversight that we know the IRS does not conduct over the Free File program . . . they’re basically allowing the Free File program to police itself,” said Dennis J. Ventry, former chair of the IRS Advisory Council.

The new portal redirects users from IRS.gov to a commercial website (freefillableforms.com) where the user enters basic personal and financial information, which is then translated into a simple tax return and filed with the IRS.

The website was constructed and is managed and maintained by Intuit, the maker of the TurboTax return preparation software, whose proposed $7.1 billion purchase of Credit Karma has been called out by lawmakers.

Intuit was running its own online stimulus check calculator for at least a week before the IRS site went live. Tim Hugo of the Free File Alliance said every company participating in the program is now offering similar services through the Free File website.

Into the System

Former National Taxpayer Advocate Nina Olson said the IRS’s decision to base the new portal on the established Free File Fillable Forms website “at least gives me more comfort than if they had created something new.”

Olson’s concern is that app users may not understand that the information they share is used for a simple electronically filed tax return, which then enters the IRS return processing system — with uncertain results.

The IRS told Tax Notes that the app creates a tax return containing minimal information to reduce the number of mistakes a user might make and to reduce the number of returns that might be rejected because of an error. “That is why it can only be used by nonfilers,” the agency explained. “If someone has filed and tries to use the tool, the submission will be rejected and the taxpayer will get the message: IRS already has a return on file for that [Social Security number].”

Yet the individual’s information started its journey through the tax system through the app operator, Lee noted. “Think of it as a [website] where you fill out a government form, and it’s returned to the government, but a private entity is the conduit,” he said. The nonfiler site is operating under the imprimatur of the IRS, he noted, “but the United States government does not own this website.”

Olson said it’s also unclear how the IRS portal processes information from people who have no adjusted gross income. During the 2008 financial crisis, the IRS’s system added $1 to those individuals’ stimulus requests, creating administrative nightmares later on for taxpayers and the tax agency, she said.

Free-to-Commercial Pipeline

Ventry, a professor at the University of California, Davis School of Law, said the Free File program as a whole, and Intuit in particular, are deserving of further scrutiny, given their recent track records with taxpayers.

In a November 2019 letter to IRS Commissioner Charles Rettig, Democratic Sens. Elizabeth Warren of Massachusetts and Sherrod Brown of Ohio cited reporting from ProPublica that Intuit used web design tricks to push Free File users into paying services. A report from Mitre Corp. criticized IRS oversight of the Free File program. Yet after Congress refused to codify the program in the Taxpayer First Act (P.L. 116-25), the IRS signed an updated memorandum of understanding with the Free File Alliance in December 2019.

Rick Heineman, spokesman for Intuit, said information submitted through the new nonfiler portal is hosted on the company’s servers, which are configured similarly to those it used for years for the Free File Fillable Forms users. The nonfiler data is segregated from the company’s customer information, and the portal is delivered on an internet subdomain distinct from commercial products, he said.

“All verification of user eligibility and information related to a stimulus payment for nonfilers . . . is handled by the IRS,” Heineman added. Intuit also operates its own free TurboTax Stimulus Registration product along with the Free File nonfiler service, he said.

But Ventry said Intuit’s documented behavior, and the wording of the December 2019 MOU, inspire little confidence about their commitment to information security and privacy. He noted that the nonfiler portal’s terms of service include the proviso that Intuit may “use your personal information for other purposes that are compatible with the disclosed purposes if and where this is permitted by applicable law.”

“This is memorializing the right of Free File companies to unleash their free-to-commercial strategy among taxpayers,” Ventry said.

Show Me the Money

Intuit and other companies are subject to IRS electronic return originator regulations, and the risk of security violations for Intuit is the same as it would be for any of the others, said Olson, who now heads the Center for Taxpayer Rights.

But information security and a “free-to-paid” pipeline described by Ventry are less of a worry for some.

“Identity theft is less of a concern for these extremely low-income taxpayers than starvation and the inability to meet basic needs,” low-income tax controversy specialist Frank Agostino of Agostino & Associates PC said.

Agostino also questioned the value of the information Intuit would be gathering on a website presumably used by overwhelmingly poor individuals. “There is no value to their information, for the garden-variety thief,” he said. “These taxpayers have nothing.”

Rather, it’s the centralization of all this personal financial information in one place that gives Agostino pause.

SSNs “are very valuable to rent and to buy,” Agostino said. “If Intuit’s got them, [criminals] are going to steal them,” he said. “Finding vulnerabilities in organizations is what organized crime is still really good at.”

Agostino said that while organized crime can always find an undocumented worker willing to buy someone’s unused or underused SSN, “I don’t see how Intuit monetizes these numbers.”

On the other hand, Agostino said he’s already hearing from taxpayers getting emails offering to expedite their $1,200 stimulus checks — for a $200 fee.

ProPublica reported April 15 that people using Intuit’s own stimulus registration product are being bombarded with marketing pitches for paid tax return preparation services.

At least one good thing has come out of the whole nonfiler registration process, Olson said. By demonstrating that it can use basic taxpayer information to fill out a tax return, “the IRS and Free Fillable Forms have just shot down their own objections to pre-populated returns,” a concept that the Free File Alliance has been battling for years to stop, she said.

Copy RID