It turns out the Intuit’s TurboTax services weren’t so “free, free, free”
As part of a $141 million nationwide settlement announced Wednesday with Intuit, the financial software company behind TurboTax, roughly 370,000 Californians will receive $11.4 million in direct payments.
The agreement, which included 51 attorneys general among others, resolves allegations that TurboTax’s ads for free tax filing services misled consumers and steered low-income taxpayers away from the Internal Revenue Services’ (IRS) Free File Program for which they qualified.
In fact, a 2020 audit by the Treasury Inspector General for Tax Administration found that more than 14 million taxpayers paid for tax filing services they could have accessed for free.
Intuit to pay $141 million settlement over ‘free’ TurboTax ads, including restitution to taxpayers
According to a report from the US Government Accountability Office published last week, while 70 percent of taxpayers are eligible for the IRS Free File Program, less than 3 percent use it.
While this is in part attributed to poor outreach and structure on the government’s part, investigations by ProPublica and officials found Intuit to have knowingly played a role in sowing confusion and guiding taxpayers towards its products instead — products that even when advertised as free often require surprise fees or upgrades to file in the end.
This is especially notable given that the Free File Program, a public-private partnership, was born out of a compromise wherein tax prep companies, including Intuit, agreed to provide free tax filing options for low-income taxpayers in exchange for the government staying out of the tax prep and e-filing market.
Intuit admitted no wrongdoing in the settlement, per a post on its blog. The Mountain View company has faced a number of consumer arbitration claims and was also recently sued for deceptive marketing in its ads by the FTC.
Users who paid for tax services that should have been free between 2016 and 2018 will receive about $30 per relevant year. Covered consumers will automatically be notified and sent checks by mail.
The settlement also requires Intuit to emphasize limitations to TurboTax’s “free” services in advertising.
Article by Marisa Endicott
Source: Nationwide settlement over misleading TurboTax ads includes $11.4 million in payouts for Californians (pressdemocrat.com)