A Valuable State Freebie

“My Government. My Terms” is the powerful slogan adopted by the federal government to describe how Internet-based technology should make it easier, less costly and more secure for citizens to manage their business with government. The maker of the popular TurboTax software package begs to differ. Intuit Inc. apparently believes that slogan should read: “Your Government. Our Profit.”

The Mountain View, Calif., company is threatening to pull its offer of free filing for low-income, elderly and some other taxpayers in California if the state continues to operate its own rudimentary tax filing system. The state Franchise Tax Board maintains it used internal programmers and spent just $500,000 to create the no-bells-and-no-whistles NetFile system, which lets the 40% of Californians with simple tax returns use computers and a modem to file directly to the state.

Intuit argues that the state has concealed the real, higher costs of its system. But if Sacramento, which often has trouble tying its shoelaces, has such a blockbuster tax payment system, why are consumers still standing in line to pay good money for TurboTax?

Taxpayers who’ve used NetFile or TeleFile, the state’s long-standing touch-tone telephone tax-filing system, aren’t going to mistake the bare-bones systems for what’s available in the private sector. The state offers little more than an electronic tax form and a program that performs basic arithmetic. No helpful prompts about deductions, no sympathetic hand-holding.

Electronic filing is here to stay because it makes the chore easier for taxpayers, reduces errors and cuts the cost of processing returns. What’s being debated in Sacramento is the role the state should play. California wisely offers two electronic options for taxpayers with relatively straightforward returns -- filing directly with the state through NetFile or using proprietary systems made available to some at no cost from Intuit and other companies.

Intuit is lobbying hard to force California to follow the federal government’s lead by forgoing a publicly operated system, NetFile, in favor of one that offers a hefty percentage of taxpayers free access to tax preparation and filing services from private-sector companies. California should stand its ground and keep NetFile available online to taxpayers. High-income taxpayers will still use accountants or software, including Intuit’s, to file their returns. But government should not deny a useful function to citizens just because a big corporation gets pushy.