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Intuit’s Turbo Tax dinged for ‘free’ tax filing services, will pay $141 million to customers
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Intuit has agreed to pay a $141 million settlement after a multi-state investigation led by the New York Attorney General's office found that the TurboTax owner engaged in deceptive and unfair trade practices to steer low-income Americans toward its commercial products and away from federally-supported free tax services.
The investigation was sparked by a 2019 ProPublica report that cited documents in which Intuit executives knew they were deceiving customers by advertising free services that were not in fact free to everyone.
"The website lists Free, Free, Free and the customers are assuming their return will be free," an internal company PowerPoint presentation said. "Customers are getting upset."
IRS CHIEF PUSHES CONGRESS FOR LAW CHANGE ON LAND-RIGHTS TAX DEALS
Up until July 2021, TurboTax allowed taxpayers earning roughly $34,000 and members of the military to file their taxes for free through the IRS Free filing program. In exchange for participating in the program, the IRS agreed not to compete with Intuit and other tax-prep companies by providing its own electronic tax preparation and filing services.
Intuit also offers a free edition of TurboTax for taxpayers with "simple returns". However, the New York Attorney General's office says the aggressively marketed "freemium" product is only free for approximately one-third of U.S. taxpayers. In comparison, the IRS' Free File products are free for approximately 70% of taxpayers.