My major reservation about using newly developed software to do my taxes is that it has no reputation - I have no idea whether to trust it or not. Will it expose me to the risk of being audited? Will it accurately send the IRS the same numbers that it's displaying on my screen? There will be no reviews available on Amazon or elsewhere when the software hits the market, and nobody I can ask about their experience with the software. I'd have to trust it on blind faith.

Also, there are strong forces working against a tiny company that wants to enter this complex market. A company with four people:

- Can't afford to hire as many testers as Intuit (or H&R Block, or the other major players) to test their software to make sure that it operates correctly.

- Can't hire as many CPAs and tax lawyers to confirm that they comply with the latest tax laws. If they want to "make income tax preparation and filing free for every taxpayer in America" (as their web site claims), that would involve staying on top of federal tax regulations, the tax regulations of fifty states, and also cities like NYC that have their own income tax.

- Can't hire as many security specialists to make sure that they're haven't overlooked a vulnerability on their web site.

So what's the value proposition? Why should people risk using this product next year instead of shelling out $25 or $50 dollars for the tax prep software they used for the last several years?

Your odds of being audited are based on the information that you provide, and that alone. Your return will be rejected if the government tests it and it fails to have the correct calculations. This happens. The government gives companies 48 hours to correct and retransmit in those cases (by law). All sorts of games are played using this 48 hours window. And it would be improper for me to discuss this with you further beyond just stating the law is on the books and it is utilized. Obviously we'd prefer to submit your return and be correct 100% of the time.

Everything you said is true. There's a pretty big difference between 4 people versus 400 people working on software. All I can say is that probably 10% (that's optimistic) of the people working on any given project make a difference in a large company. At least that's been my experience. And that's why you get startups bringing products to market with great success over and over again.

We encourage you to keep spending the money if it gives you the warm feelz! It's your money and it's our job to convince you to make the switch. You'll be able to use any product out there and compare the results for yourself before submitting your returns next season, so we've got that going for us.

I'm not sure I've ever seen tax prep software where you couldn't print out the return and mail it in yourself - wouldn't that address your "blind faith" and accuracy arguments?

Presumably they're building something a little more innovative in which case the product speaks for itself and the lack of reputation is outweighed by overcoming a severe pain point.

You might as well put up a sign-up box on your home page, to start collecting emails. Then when you launch your beta, you'll have a set of customers ready!

Good luck.

You know, I had no idea I could scroll down on your homepage. It just looked like a simple landing page for me, so I closed the tab.

I find this a problem with all the newfangled webpage designs... but on others, there's an indicator that there is more content below.

I have no idea why everyone decided, all at once, that scroll bars should be invisible by default. The presence of a scroll bar communicates useful information! Why would you hide that?

LOL I'm not even in the same league as a designer... Template fail :)

Maybe I missed the answer to this, but how are you doing this for free? Obviously your business needs to make money somehow.

As others have said you should definitely put a sign-up form on your site.

I don't know how they plan to monetize, but plenty of companies do it, such as Mint. When you have all that tax data, I bet you have plenty of opportunity to sell stuff.

Hm, does that mean you'll take a % of the deduction? Hm that sounds illegal actually, but maybe instead the software is free and you charge per hour to get access to a high quality, certified income tax guy to help with weird situations / edge cases / provide a personal touch!

We would never steal from our customers. That's not what this is about.

What is this, a guessing game? If you don't want to answer the question, please let us know instead of giving vague answers.

Sorry to be vague, but honestly it's not a riddle. It's just not something we want to announce yet.

just say so, then. being tantalisingly vague in an attempt to build interest can backfire very badly.

Likely a portion of the refund.

Sounds like a great project but don't you fear that you will be sued immediately by TurboTax? Any large company I've done work with in the past has had me explicitly sign agreements that would prohibit me from going out and creating competing software with the domain knowledge I had obtained.

Yes. That's why I retained an IP lawyer to review the agreements that I signed and to write an opinion about my plans. Every sw company will require you to sign these documents NDA and Non-compete. The key is don't steal their trade secrets, code, client lists, employees, etc. A lawyer can sue you or me at any time. The problem there is that a case that doesn't have merit will just look like bullying and help our cause. Even if they win a case like that what do they gain? An injunction to force ppl to pay for a service that should be free to every tax payer? Not a good fight to have IMHO.

I empathize with that prospect, but unless you have deep pockets, won't you be quickly vaporized into dust through legal fees? This is especially problematic given the seasonal nature of income tax.

It isn't a concern.

Great answer, and honestly a lawsuit may draw more attention to your site/cause.

This looks great. Doing your taxes sucks.

One completely unrelated question (and I hate to be that person on HN): is the accelerated scroll on the website intentional? It's a really good looking site, but the scroll speed makes it very hard to read.

The scroll kind of stinks. Honestly I didn't spend much time putting it up and that's one thing that's annoyed me as well. It'll get better over time. The real focus is on the application that makes filing free right now which is going to blow people away.

Ha I think it's a wordpress theme (if you cmd + f in the view source for the page) so they may be able to change that setting but yeah by default it may be accelerated?

It is Startup Framework: http://designmodo.com/startup/

agreed

Have you ever thought about building tax software for the other side of the fence i.e preparers? I'd love a chat about why the existing competition sucks and what's truly missing from the software market for tax professionals.

Tax pros are like developers, most comfortable closer to the bare metal if you will. They use a separate product line that mimics the actual forms closely. They don't like the interview style because it just slows them down when they're barreling through hundreds of returns. Beyond the UI, there's no difference in the calculations they work with so that should tell you something.

Maybe (someday) you can build two different UIs to the same return. For example, I can hire a CPA and then share with him/her my return. I can upload the docs and numbers, and the CPA can do the magic using the bare metal UI.

I heard from my CPA that Intuit provides very poor support for their ProSeries / Lacerte software, because they are trying to get everyone to use Turbotax instead. So even CPAs have a pain point that you could solve.

Is there a particular problem with the software used by tax professionals? Clearly they're not using consumer-focused software since their needs would be different.

It seems like a domain a developer typically wouldn't have much insight into without a tax professional talking about it openly, or having worked on a product previously.

Tax pros care about speed even more than consumers, but I'm not sure there's a problem with that. It's just a different mindset.

kdragon's post seemed to indicate that he's aware of problems on the professional side and has ideas on how to fix them. I was curious about that.

I find it odd that there are no free online tax filers in the US? TurboTax has a free version in Canada, and some competitors do as well. I like the idea though. Tax filing can always be made easier.(nevermind, a quick search shows that both TT and H&R have free filers.)

Free for filers that make $58,000 or less.

Indiegogo Campaign: https://www.indiegogo.com/projects/tax-compactor-free-income...

Because this is looking for a co-founder, it's ok. Job posts aren't allowed, except via /jobs (it is one of two areas where YC companies are allowed an edge on HN).

I'll change the title to make the cofounder bit explicit.

Thanks dang.

As European, I'd like to say that it would be awesome if your app had enough abstractions built-in to make it adaptable to non-US systems. The fundamentals if tax systems everywhere are the same after all (money comes in on some basis, and some of it must be taxed according to some rules), a pluggable architecture would be nice; it would also make it much easier to update when the inevitable changes in tax law come around.

I'm not familiar with Euro tax codes. But I don't think it would be hard to adapt using the proper rules engine. We'll take a look but too soon to promise anything.

I can't contribute but I just want to say you are awesome and I hope you succeed! It'd be an incredible contribution to our democrasy!

Wow, this blows me away.

Are you open to sharing what stack your team will develop with? I didn't catch that here, on your site, or your HN profile. As someone that's interested in this, that's one of the first questions I have; others may as well.

I'm not co-founder level, but I'm going to keep an eye on this.

Best of luck, I really hope you guys knock it out of the park.

At the moment it's a Java stack, but we're intentionally not limiting our search to Java developers because we don't mind learning new ways of doing things - we love that part of software development.

That said, web is pretty broad so if you're a database expert that also dabbles in sys admin and node then we're interested in talking with you. If you're a talented engineer you can adapt to new technologies is the way we see it.

Understood. I do focus on full stack web, but primarily through JavaScript and LAMP.

I'm positive I'm not co-founder material though. I'm still going to keep eye on you guys, primarily b/c I hope you succeed, though I also want to see what future developer opportunities may arise.

Man, this is really weird. Just a few hours ago I came up with what I think is an awesome for a tax-related service. I was reading HN, as I do daily, before I decided to start Googling for possible competitors. Imagine my surprise when Google brought me back to HN, to a post from just a few hours ago that I somehow managed to miss.

I shot you an email. Definitely interested in "fixing" tax prep... It's pretty sad how obtuse they make things and how often tax prep software nickel and dimes you even though the actual computational aspects of filling in the forms is pretty negligible.

Nice! We totally agree with you. We'll be in touch.

You guys should have an email sign up form so people know how to subscribe for updates!

Will add. Revisit the page tomorrow.

Will this just make the tax return process simpler or will your AI assist in finding the loopholes that the wealthy exploit?

It would be fun to see everyone claim deductions on dog food the same way a rich guy might deduct on his horses.

I would say that most of the "loopholes" that you're referring to aren't really accessible to the average Joe because most of us make what's considered "Earned Income". That's what your salary is considered and it's taxed according to your tax bracket. Wealthy people will structure their income and their holdings in ways to minimize the amount classified in the earned income bucket. The extreme is when executives take $1 salary.

The AI is going to be superior in terms of explaining which factors played in your return. This will become clearer how powerful it is when the application suggests ways to optimize your situation and you basically have a playbook in hand to use.

Sounds like you're going to be using some weighted statistical methods in there.

I also read that you're going the Java route. Decent option for handling the load (free tax returns will pull in a big amount of people - assuming they trust the service), but considering you guys are going to be 4-5, perhaps python with the data packages(numpy et. al) might help with AI (which reads like intense probability calcs).

Stupid question: How do you make money with a "free" tax service?

We'll announce that in the future.

good luck but when i read something like "Our tax engine is built using artificial intelligence." it doesn't exactly make me think "this is a legit product"

What, if any, obstacles do you face getting the IRS to accept returns from your software? What about states?

Glad someone is doing this by the way, and best of luck!

The IRS is easier to deal with. They're more efficient but all require an acceptance process to transmit. The states are in priority order starting with CA just purely based on # of returns and then NY, Illinois, Penn, etc. Trying to do as many as possible.

Dropped you an email! This sounds like a very interesting problem domain that I'd enjoy working on.

Cool! I'm forwarding it to the team.

I think Tia's job title should read "Principal Tax Analyst", not "Principle".

Fixed

Clickable http://taxcompactor.com

Sounds awesome!