Watch out, TurboTax: This upstart tax-filing service is helping families claim their refunds
After its first full tax season, the tax-software startup Column Tax says it has successfully tapped into a growing need among people who qualify for tax refunds but don’t have the resources or help to claim them. Column Tax, founded two years ago, is an embedded tax-filing service that specifically focuses on helping low-income families file their taxes for free. According to CEO Gavin Nachbar, the company is aiming to integrate tax filing into apps that people already use. This tax season, more than 10 apps embedded Column Tax, including Providers, an app owned by Propel—a company that builds technology to help low-income families improve their financial health. “Through amazing partners like Propel, we can help expand access to financial tools like tax filings that are oftentimes gated by expensive prices, confusing products, and other stuff,” Nachbar says. According to Propel CEO Jimmy Chen, Providers aims to be a “horizontal” app; he notes that already it’s used by more than 5 million low-income families to manage their government benefits, such as food stamps and childcare. With the embedding of Column Tax, the Providers app can now extend specialized services into the tax realm. Chen and Nachbar tell Fast Company exclusively that through the collaboration, Column Tax was able to process 17,000 returns and access $50 million in refunds owed to low-income families by helping them do their taxes from the same place where they receive government benefits. Of those families who filed with the service this tax season, 40% had not previously filed last year, leading to net new money from the refunds they received. “That public policy challenge of reaching people who were eligible for a refund but who didn’t file in previous years is something that we’ve spoken to the [Biden] administration about,” Chen says. “The fact that we were able to demonstrate some of that in this first year of working together is something that I’m super excited about.” While Column Tax declined to share any business metrics, the company instead pointed to its impact metrics from this tax season: returns filed in all 50 states, 15-plus partnerships, and more than $100 million total processed in refunds and credits. “Something like 70% of people qualify for free tax filing, but something like 2% actually used it during this 2022 season,” Nachbar says, quoting data from the national Taxpayer Advocate Service’s annual report to Congress. “Tax filing is super complicated, and helping people in a friendly way and in a way that they trust is an important part of bridging that gap.” According to an April update from the IRS, an estimated $1.5 billion in refunds remains unclaimed because people have not yet filed their 2019 tax returns, facing a July 17 deadline to do so. Column Tax serves as an alternative to companies like Intuit-owned TurboTax, which has come under fire for displaying misleading marketing that led users to pay for services when they qualified for free tax filing. “I think there’s a ton of opportunity here,” Chen says. “And in the spirit of learning, it’s never perfect, we’re never done, but there’s a lot of listening to our users that we’ve already done around this to understand how they found the experience. . . . It’ll help us get even bigger numbers next year.”
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