Companies that offer online tax preparation in the US will no longer be able to hide their free filing offerings from search engines after an exposé revealed that they were engaging in the practice.
Last April, investigative journalism nonprofit ProPublica detailed how Intuit, the company behind the most widely-used tax prep service, TurboTax, had added a “noindex,nofollow” directive for search engines to the landing page for its TurboTax Free File offering, which allows taxpayers meeting certain criteria to electronically file their federal tax returns at no cost.
TurboTax Free File is offered under a program called Free File, which the US Internal Revenue Service (IRS) launched in 2003. Designed to increase tax compliance, the program is run in conjunction with the Free File Alliance, a consortium of private tax prep companies that includes Intuit. Notably, the original deal to create Free File included a provision under which the IRS agreed not to launch its own electronic filing (e-filing) offering.
This provision was a big win for the industry, as tax prep is a multi-billion dollar business that could be disrupted overnight if the IRS decided to offer taxpayers its own free e-filing service. Obviously, such an offering would likely result in significant losses for companies like Intuit, which also offer paid efiling services.
Thanks to SEO and questionable marketing, it would appear the industry has been having its cake and eating it too: according to ProPublica, “while 70% of taxpayers are eligible for Free File options from TurboTax and other tax software products, just 3% of eligible taxpayers or fewer use them each year.”
Maintaining that incredibly profitable discrepancy could get more difficult, however, as the IRS last month announced a new provision to its Free File agreement that states:
“[Free File Members] are prohibited from engaging in any practice that would cause the Member’s Free File Landing Page to be excluded from an organic internet search.”
In addition, in an attempt to reduce consumer confusion, companies will have to use a standardized name for their Free File offerings: “IRS Free File program delivered by [product name].” Finally, the updates to the Free File agreement removed the provision under which the IRS agreed not to launch its own e-filing service.
How will tax prep companies respond?
The changes the IRS is making to Free File will create new challenges for tax prep companies. Obviously, they will no longer be able to directly tell search engines not to index their Free File landing pages, so to the extent that they want organic search traffic directed to non-Free File landing pages, their SEO efforts will need to become more sophisticated.
It is also possible the new rules will cause them to invest more in paid search to boost the profile of their non-Free File landing pages. Given that organic results are getting less and less love from Google, this might be especially effective if done right.
Industry giant Intuit might has already made adjustments as the company removed the “noindex,nofollow” directive from its Free File landing page following ProPublica’s exposé. Currently, landing pages for the company’s non-Free File offerings appear ahead of its Free File landing page in the Google SERPs, and the company is also advertising a non-Free File landing page using AdWords.
The big question now is whether the IRS will launch its own free e-filing service. Although the agency has not announced plans to do so, the fact it decided to free itself from the restriction not to suggests that it is at least eyeing the possibility.
With this in mind, companies like Intuit would be wise to go beyond tactical adjustments designed to foment and take advantage of consumer confusion and lack of awareness. While effective lobbying has allowed the tax prep industry to reap billions of dollars in revenue, if and when their paid services are no longer a necessity and more consumers know that, they will find themselves having to convince consumers that they are worth paying for.
By thinking more broadly about how their paid services can deliver real value in an environment in which they have to compete head-to-head with truly free, tax prep companies can prep for the day when that environment exists.