Virginia Republican linked to tax-filing companies that scammed poor Virginians

Virginia Republican Del. Tim Hugo is linked to two companies that steered low-income Americans — including Virginians — away from free tax-filing programs even though they were eligible to use them. Instead, the companies used “deceptive design and misleading advertising to trick lower-income Americans into paying to file their taxes,” according to an April ProPublica investigation.

Hugo is the executive director of the Free File Alliance, a nonprofit organization representing 12 tax software companies. The Free File Alliance entered into an agreement with the IRS to provide free tax-filing services to millions of low-income Americans. In return, the IRS would not provide free tax software for Americans.

But two of the Free File Alliance’s biggest members, Intuit, which owns Turbo Tax, and H&R Block, intentionally made it harder for Americans to find and use the free versions, even if they qualified for it. Through using computer code on their website, “TurboTax Free File is effectively hidden from Google,” ProPublica reported. Further, “Intuit’s smaller competitor in the market, H&R Block, also hid its H&R Block Free File product from Google using the same sort of code.”

Under the deal signed by the Hugo’s Free File Alliance, the companies had vowed to “increase electronic filing of tax returns, which includes extending the benefits of online federal tax preparation and electronic filing to economically disadvantaged and underserved populations at no cost,” the ProPublica investigation found.

During Hugo’s tenure as executive director, H&R Block sent a memo to customer service employees instructing them to steer potential clients to the paid section of the website “unless they are specifically calling about the Free File program,” according to a memo uncovered by ProPublica. “We want to send users to our paid products before the free product, if at all possible,” the memo added.

Employees at Turbo Tax told ProPublica that the company had a “purposeful strategy” of steering customers away from the free option, which also happened during Hugo’s tenure at the Free File Alliance.

Approximately 50% of Virginia households would have qualified for free tax filing services in 2018, according to documents obtained from American Bridge, a progressive research organization. However, less than 3% of Virginians used such a service that year.

Across America, ProPublica estimates taxpayers eligible for free filing services spend about $1 billion per year on unnecessary filing fees.

Intuit and H&R Block are sharing their gains with Hugo. Between 2007 and 2019, the two companies donated more than $33,000 to Hugo’s campaign, according to American Bridge. As recently as 2018, Hugo accepted $2,000 from H&R Block as he gears up for his 2019 reelection campaign.

In November, Hugo faces off against Democrat Dan Helmer in a district Hillary Clinton won by double digits in 2016. Hugo is one of seven Republican delegates running in a district carried by Clinton. There are no Democrats running in districts carried by Trump, according to data compiled by Ballotpedia.

In the Virginia legislature, Republicans hold a slim majority in both chambers. All seats in both the House of Delegates and state Senate are up for reelection on Nov. 5.

Published with permission of The American Independent Foundation.