Thuggo Throttles Tax Breaks, Successfully Lobbies IRS to Scam Poor Virginians

Editors’ Note: Excerpted from ProPublica, October 29, 2019. We are publishing this tonight because we believe it is important that citizens of the 40th House of Delegates District be aware of this information before Tuesday’s election. (In 2015, Hugo won by only 99 votes.)

B R E A K I N G   N E W S

Tim Hugo is running for reelection in Virginia’s 40th House of Delegates District, against Democratic challenger Dan Helmer. You probably knew that. What you likely did not know, however, is that Hugo was a lobbyist for tax-preparation firms–such as Intuit and H&R Block–that deliberately steer low-income tax filers away from truly free methods of filing, to increase these companies’ profits. 

According to a ProPublica investigation, the companies used “deceptive design and misleading advertising to trick lower-income Americans into paying to file their taxes.” 

Hugo is executive director of the nonprofit Free File Alliance, which represents about a dozen tax software companies. The Alliance entered into an agreement with the IRS to provide free tax-filing services to millions of low-income Americans. In return, the IRS agreed not to provide free tax software.

The IRS attempted to hide emails revealing how Hugo’s group basically wrote the rules; after ProPublica sued and the documents were released, it was clear who was in charge.

However, two of the Alliance’s biggest members, Intuit, which owns TurboTax, and H&R Block, intentionally made it harder to find and use their free versions. Through the use of computer code on its website, “TurboTax Free File is effectively hidden from Google,” ProPublica reported. Further, “H&R Block also hid its free file product from Google using the same sort of code.”

The IRS attempted to hide emails revealing how Hugo’s group basically wrote the rules; after ProPublica sued and the documents were released, it was clear who was in charge.

In the fall of 2018, IRS’ expert Advisory Council, which had spent months investigating Free File, was set to release a “blistering report concluding that the IRS’ ‘deficient oversight and performance standards for the Free File program put vulnerable taxpayers at risk.’” While the draft report had been delivered to IRS, it had not yet been publicly released. Hugo and the Free File Alliance’s lawyer (and lobbyist for Intuit) requested an urgent meeting (emphasis added) with IRS, to extend the program. Hugo emailed changes (“enhancements”) that the Alliance wanted in the program, and succeeded: it was extended through October 31, 2021, with the Hugo “enhancements” included. The critical IRS advisory council report was released just two weeks later.

Remember next Tuesday, you have another choice: Dan Helmer. 

 

To read the entire ProPublica report, go to https://www.propublica.org/article/the-irs-tried-to-hide-emails-that-show-tax-industry-influence-over-free-file-program.



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