13 lawmakers have recently owned stock in TurboTax's parent company, which the federal government is probing over its 'deceptive' advertising for 'free' tax-filing software
Bill Clark/CQ-Roll Call, Inc via Getty Images; Kimberly White/Getty for TurboTax; Andrew Harnik/AP
- Insider found at least 13 lawmakers that have held stock in TurboTax's parent company.
- Liberal lawmakers are trying to break Intuit's limits on the government's ability to make it easier for all taxpayers to file their taxes for free online.
- Intuit is also facing a federal probe over allegedly deceptive advertising.
At least 13 members of Congress have recently held a financial stake in Intuit, the parent company of the TurboTax, the tax preparation giant that has staged a decades-long effort to make it harder for Americans to file their federal taxes for free, according to financial disclosure documents.
Lawmakers' investments in Intuit come at a time when the Biden Administration has targeted the company, with the Federal Trade Commission in March issuing an administrative complaint and suing Intuit in federal court "for deceiving consumers with bogus advertisements pitching 'free' tax filing that millions of consumers could not use."
Their investments also stand out as Congress itself actively debates whether to ban its elected members from trading individual stocks — a practice that lawmakers have long permitted for themselves. Insider's "Conflicted Congress" project has found rampant violations of current financial disclosure laws and potential conflicts of interest among dozens of lawmakers.
Reps. Michael McCaul, a Texas Republican, and Ro Khanna, a California Democrat, and their respective families own the largest holdings in Intuit.
McCaul, mostly through his wife, Linda, has reported trading upwards of $700,000 in Intuit stock in just the past two years, according to congressional financial disclosure reports.
Khanna, mostly through his wife, Ritu, reported owning as much as $115,000 in Intuit stock, according to his most recent annual financial disclosure.
A spokesperson for Khanna stressed that the lawmaker, who is viewed in some progressive circles as a future presidential candidate, is supportive of efforts to make it easier for more Americans to file their taxes online for free.
"Rep. Khanna does not own any individual stocks and complies fully with the [proposed] Ban Conflicted Trading Act, which would prohibit lawmakers from buying or selling individual stocks. Any assets in question are his wife's assets prior to marriage and in a diversified trust that is managed by an outside financial advisor," a Khanna spokesperson said in a statement. "He believes that Americans should be able to easily file their taxes online for free and has consistently opposed efforts to block the IRS from creating free electronic filing."
One Democratic lawmaker — Rep. Kathy Manning of North Carolina — reported the sale of part of her Intuit holdings more than 5 months after the sale, a flagrant violation of the law that requires lawmakers to notify the public no more than 45 days after such a transaction takes place.
Manning, whose violations were first reported by Sludge, a nonprofit news organization, is one of the 59 lawmakers Insider has identified since 2021 of violating the disclosure provisions of the Stop Trading on Congressional Knowledge (STOCK) Act of 2012, a federal law designed to stop insider trading and prevent conflicts-of-interest.
Manning, whose office did not reply to Insider's requests for comment, reported selling as much as $30,000 worth of Intuit stock last August and October.
Clerk of the House of Representatives
Rep. Dean Phillips, a Democrat from Minnesota, last summer joined a small, but growing number of lawmakers in putting his tradable assets in a "qualified blind trust" — a publicly disclosed, congressionally approved financial arrangement in which a lawmaker officially transfers management of their financial assets to an independent trustee.
Sam Anderson, a Phillips spokesperson, said that the congressman's move is "an all-too-rare decision he hopes becomes the rule in Congress." Before he announced the blind trust, Phillips reported owning between $15,001 and $50,000 in Intuit shares. (Members of Congress are only required to disclose the values of their holdings in broad ranges.)
Other lawmakers who have disclosed holding or recently holding Intuit stock shares include:
- Rep. Bill Keating, a Democrat from Massachusetts, purchased between $1,001 and $15,000 in Intuit stock in March 2021 and has held it ever since, according to congressional stock trade disclosures.
- Rep. Byron Donalds, a Republican from Florida, who held between $1,001 and $15,000 in Intuit stock through a retirement account, according to his most recent annual disclosure.
- Rep. David McKinley, a Republican from West Virginia: his wife Mary sold part of her holdings in August 2021 for between $1,001 and $15,000 through a retirement account.
- Rep. Fred Upton, a Republican from Michigan: held between $1,001 and $2,000 in Intuit shares, according to a hand-written notation on his most recent annual disclosure. Upton, or someone else, also added a hand-written note that the shares are part of a JPMorgan account that he has no control over.
- Rep. Peter Meijer, a Republican from Michigan, reported capital gains and dividends in 2020 from a trust that held Intuit shares that he sold the same year, according to his most recent annual disclosure. A Meijer spokesperson said, "Rep. Meijer's knowledge, the trust has sold all equities. He has no investment advisory authority."
- Rep. Richard "Rick" Allen, a Republican from Georgia, reported that his wife, Robin, held between $15,001 and $50,000 in company shares, according to his most recent annual disclosure.
- Sen. James Inhofe, a Republican from Oklahoma, reported less than $1,001 in capital gains and dividends from Intuit shares, according to his most recent annual disclosure.
- Sen. Tommy Tuberville, a Republican from Alabama, sold between $1,001 and $15,000 worth of Intuit shares on March 30, the entirety of his stake in the company, which he held in a joint account with his wife, Suzanne.
Additionally, when former Rep. Gil Cisneros, a Democrat from California, left office in early 2021, he reported owning between $50,001 and $100,000 worth of Intuit stock, having in 2020 earned capital gains and/or dividends from it valued at between $15,001 and $50,000, according to a disclosure he filed in April 2021.
Cisneros now serves in the Biden administration as under secretary of defense for personnel and readiness.
Ethics experts told Insider it is hard to judge the details of any single trade or even a lawmaker's actions, but stressed the questions around such activity underline the necessity of passing a law to ban such practices.
"When you have members of Congress that have stock in a company that has a specific interest in an issue that is before Congress, we're always going to have to ask whether that stock ownership influenced that member of congress decision making — that if a member stands to benefit by a blocking a proposal or blocking a proposal there's always a very real possibility that is going to influence what action they may take," Noah Bookbinder, president of Citizens for Responsibility and Ethics in Washington, said in an interview. "That shouldn't be the case. We shouldn't have to question the motives of members of Congress on issues that affect millions of Americans."
Dylan Hedtler-Gaudette, government affairs manager for nonpartisan watchdog group Project on Government Oversight, said this "appearance of a conflict of interest that can just be as destabilizing" for public trust in Congress itself.
PAUL J. RICHARDS/AFP via Getty Images
TurboTax has fought hard to remain on top
TurboTax has been a major boon for Intuit, powering the Silicon Valley software giant to lofty heights as Americans began rapidly shifting from filing paper tax forms to moving online.
But as ProPublica documented in an extensive 2019 report, Intuit's dominance is based on the company's ability to limit how many Americans can easily file for free federal returns.
"For a decade proposals have sought to create IRS tax software or a ReturnFree Tax System; All were stopped," reads a confidential 2007 PowerPoint presentation from an Intuit board of directors meeting obtained by ProPublica.
The struggle dates back to President George W. Bush, whose White House initially proposed making a host of government services more accessible, including the ability to file taxes.
Intuit kicked its lobbying into high gear. As a result, the IRS caved on the initial hope and settled for a partnership of tax prep companies, led by Intuit, that agreed to "provide free federal filing to 60% of taxpayers, or about 78 million people at the time," according to ProPublica.
As of tax day 2022, an estimated 70% of taxpayers Americans can file their taxes for free. But as Vox points out, comparatively few people take advantage of this service. Only 4.2 million returns or roughly 2.6% used the FreeFile program in 2019.
Intuit has continued to spend millions of dollars each year lobbying the federal government. According to OpenSecrets, a nonpartisan research organization, the company spent nearly $3.3 million in 2021 and about $3.4 million in 2020.
Like other major companies, it has also relied on the revolving door between government and the lobbying industry to enlist former top administration officials and lawmakers in its advocacy. At least four former members of Congress have lobbied on Intuit's behalf.
Some lawmakers want to limit Intuit's power.
Democratic Sen. Elizabeth Warren of Massachusetts, a former presidential candidate, and Rep. Brad Sherman, a Democrat from California, introduced sweeping legislation in 2019 that among other measures would prohibit the IRS from entering into the type of agreement it made with Intuit and other tax prepares that dates back to the Bush administration. It would also direct the IRS to develop its own way for all Americans to file their taxes for free online.
Warren and Sherman's legislation is co-sponsored by progressive stalwarts like Rep. Alexandria Ocasio-Cortez of New York and Sen. Bernie Sanders of Vermont but has yet to garner any Republican support.
"TurboTax is bombarding consumers with ads for 'free' tax filing services, and then hitting them with charges when it's time to file," Samuel Levine, Director of the Bureau of Consumer Protection, said in March. "We are asking a court to immediately halt this bait-and-switch, and to protect taxpayers at the peak of filing season."
Intuit said in response that the "FTC's arguments are simply not credible" and argued that more Americans are taking advantage of its free filing offerings.
"In fact, Intuit has always supported consumers filing for free as a founding member of the IRS Free File program and in our other practices," the company said in a statement. "The FTC's complaint fails to acknowledge the reality that Intuit was, at all times, in compliance with the IRS requirements."
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