The tax preparation software companies already started selling their packages for 2008 tax year. The two major players Intuit and H&R Block both advertise that they include free federal e-file in their software this year.
From Intuit (maker of TurboTax):
NEW! Free Federal Efile Included — There’s no additional cost to efiling your federal tax returns. Efiling your state personal return(s) costs $17.95 per efile.**
From H&R Block (maker of TaxCut):
H&R Block continues to be the industry leader and supporter of e-filing, setting the standard with 100% of its products and services now including federal e-file at no additional cost to the consumer.
* At the time of this writing, H&R Block is an advertiser on this site.
You have to love marketing spins. Neither of them tells you that they increased the product prices to cover the bundled free e-file. Here are the prices of TurboTax and TaxCut “federal + state” products for 2007 and 2008 tax years.
| 2007 without E-File | 2008 with free E-File | |
| TurboTax Federal + State | $45 | $60 (+33%) |
| TaxCut Federal + State | $40 | $50 (+25%) |
You tell me if the free e-file is really free.
When e-file first started, it was offered as a “free after mail-in rebate” option. The products included a coupon. If you wanted e-file, you first pay for it and then you get it back if you send in the rebate. Then last year (or was it the year before?), it became a paid option. No more mail-in rebate coupons. If you wanted e-file, you had to pay for it, either separately or by purchasing a premium package at a higher price. Now this year everybody is forced to pay for e-file, whether you want it or not.
I happen to not like e-file. I stated my reasons in a previous post. Why am I forced to pay for it? Because they can. Customers are like that frog in slowly-heated water. First they got some convenience for free in exchange for some hassle of mail-in rebates. Those who didn’t bother with their rebates paid the price. Then the customers who wanted the convenience were asked to pay. Some balked; some gave up and paid. Now everybody is asked to pay. It doesn’t help we have basically a duopoly in the market. If both players are satisfied with their market share, when one increases their price, another can simply follow. Then both players will be happy financially.
Am I being petty to quibble about a once-a-year $10-15 price increase? Well, part of it is based on principle. Right now state e-file still costs extra. Who knows maybe next year the products will bundle state e-file too and force everybody to pay? Thank God Intuit reversed its decision to charge $10 extra for each additional return printed. But the move to bundle e-file at a higher package price was happily accepted by its competitor. If H&R Block signals it’s willingness to follow the same per-return pricing model, next year both will charge extra for additional returns.
This duopoly is not good for the customers. I’m going to support a 3rd player this year. I will use TaxACT. I will do a side-by-side comparison like I did between TurboTax and TaxCut for tax year 2007 (see previous post).
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