Intuit to Pay $141 Million in Multi-State Settlement for Misleading TurboTax Ads

Intuit Ad For Turbotax

The 2003 version of the TurboTax software contained digital rights management that tracked whether it had previously been installed on a computer by writing to sector 33 on the hard drive. This allowed it to track if it was on a computer previously, even through reinstalling the operating system.

Intuit bid on paid search advertisements to direct consumers who were looking for the IRS Free File service to the TurboTax “freemium” product instead. Intuit also purposefully blocked its IRS Free File landing page from search engine results during the 2019 tax filing season, effectively shutting out eligible taxpayers from filing their taxes for free. Moreover, TurboTax’s website included a “Products and Pricing” page that stated it would “recommend the right tax solution,” but never displayed or recommended the IRS Free File program, even when consumers were ineligible for the “freemium” product.

Intuit To Pay $141M Settlement Over ‘Free’ TurboTax Ads

Intuit, the company behind TurboTax, has agreed to pay out $141 million after it “cheated millions of low-income Americans out of free tax filing services,” in the words of New York Attorney General Letitia James. Most of that money will go to consumers that were tricked into paying for its service. This comes as the result of an agreement it made with the AG , which will also require the company to change its marketing practices. “Intuit cheated millions of low-income Americans out of free tax filing services they were entitled to,” James said in a statement. One was through its participation in the Internal Revenue Service’s Free File Program, geared toward taxpayers earning roughly $34,000 and members of the military. The company also offers a commercial product called “TurboTax Free Edition” that is only for taxpayers with “simple returns,” as defined by Intuit.

In 2008, Intuit raised the price of TurboTax for desktop customers by $15 and included a free e-filing for the first return prepared. The company’s new “Pay Per Return” policy was criticized for adding a $9.95 fee to print or e-file each additional return after the first, including returns prepared for members of the same household. On December 12, 2008 the company announced that it had rescinded the new policy. The company has been subject of controversy over its political influence and deceptive business practices. Intuit, the maker of TurboTax, has lobbied extensively against the Internal Revenue Service creating its own online system of tax filing like those that exist in most other wealthy countries. Intuit is under investigation by multiple state attorneys general, as well as New York’s Department of Financial Services.

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Just share your documents and your tax expert will take it from there, keeping you in the loop at every step. Tell us about you and we’ll match you with a dedicated tax expert based on your unique situation, so you get every deduction you deserve as they do your taxes. Attorney General James led the multistate investigation with Tennessee, with support from the attorneys general of Florida, Illinois, New Jersey, North Carolina, Pennsylvania, Texas, and Washington.

  • Indiana will receive $2.9 million as part of a national settlement over allegations that tax service product TurboTax was deceptively advertised.
  • The spokesperson added that a “government-run pre-filled tax preparation system that makes the tax collector the tax preparer is fraught with conflicts of interest.”
  • “Only after the taxpayer entered extensive information did the product inform them that they had to upgrade to a paid service,” the office said.
  • Intuit, the owner of popular tax filing software TurboTax, will pay $141 million in restitution to millions of low-income Americans who were “unfairly charged” for services that should have been free, according to a multistate agreement announced Wednesday.
  • Intuit withdrew from the program in July 2021, saying in a blog post that the company could provide more benefits without the program’s limitations.
  • “This agreement should serve as a reminder to companies large and small that engaging in these deceptive marketing ploys is illegal,” she added.

Under the terms of the settlement, Massachusetts will receive $2.3 million for tens of thousands of eligible consumers who were allegedly deceived into paying to file their federal tax return, officials said. However, this TurboTax “freemium” product is only free for approximately one-third of US taxpayers. What they should’ve used was the hard-to-find Free File version, which was part of the Internal Revenue Service’s Free File program. The program came from a partnership between the government and tax companies that included Intuit. It was supposed to make sure the majority of Americans would have access to a free version of tax preparation software like TurboTax. It also, as the press release notes, prevented the IRS from creating its own competing service. The Office of the Attorney General initially opened an investigation into Intuit following a ProPublica article that claimed the company had been steering low-income customers away from free tax services and toward its commercial products.

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This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply. The settlement marks $385 million recovered through court judgments and consumer settlements by the Indiana Attorney General’s Office since Todd Rokita took office in January 2021, according to the office. For inquiries related to this message please contact our support team and provide the reference ID below.

The states wish to thank the Federal Trade Commission for its assistance in the investigation. On May 4, 2022, Intuit agreed to pay a $141 million settlement over the misleading advertisements.

Who qualifies for TurboTax settlement?

NEW YORK – New York Attorney General Letitia James today announced a record multistate agreement with the owner of TurboTax, Intuit Inc. , for deceiving millions of low-income Americans into paying for tax services that should have been free. As a result of Attorney General James’ agreement, https://turbo-tax.org/ Intuit will pay $141 million in restitution to millions of consumers across the nation who were unfairly charged. In addition, Intuit must suspend TurboTax’s “free, free, free” ad campaign that lured customers with promises of free tax preparation services, only to deceive them into paying.

Impacted consumers are expected to receive a direct payment in the mail of approximately $30 for each year that they were deceived into paying for filing services, officials said. Consumers are expected to receive a direct payment of approximately $30 for each year that they were deceived into paying for filing Intuit Ad For Turbotax services. The OAG’s multistate investigation found that Intuit engaged in several deceptive and unfair trade practices that limited consumers’ participation in the IRS Free File Program. The company used confusingly similar names for both its IRS Free File product and its commercial “freemium” product.

The company behind the TurboTax tax-filing program will pay $141 million to customers across the United States, including in Illinois, who were deceived by misleading promises of free tax-filing services, officials announced. An investigation into Intuit began after ProPublica reported that the company was using deceptive digital tactics to steer low-income consumers toward its commercial products and away from federally-supported free tax services. Under the agreement, Intuit will provide restitution to consumers who started using the commercial TurboTax Free Edition for tax years 2016 through 2018 and were told that they had to pay to file even though they were eligible for the version of TurboTax offered as part of the IRS Free File program. NEW YORK — The company behind the TurboTax tax-filing program will pay $141 million to customers across the United States who were deceived by misleading promises of free tax-filing services, New York’s attorney general announced Wednesday.

  • Additionally, Intuit’s “Products and Pricing” page that claimed to “recommend the right tax solution” never displayed or recommended the IRS Free File program, the announcement said.
  • This is complemented by an integrated multi-channel campaign across digital, social and high-reach media.
  • For example, in tax year 2018, Intuit hid the landing page for its IRS Free File Program from search engines for about five months during the peak of tax season, they alleged.
  • “Intuit cheated millions of low-income Americans out of free tax filing services they were entitled to,” James said in a release.
  • “For years, Intuit misled the most vulnerable among us to make a profit. Today, every state in the nation is holding Intuit accountable for scamming millions of taxpayers, and we’re putting millions of dollars back into the pockets of impacted Americans,” James said in a statement.

On January 21, 2009, TurboTax received considerable public attention at the Senate confirmation hearing of Timothy F. Geithner to be the United States Secretary of Treasury. Geithner had testified that he used TurboTax to prepare his tax returns for the years 2001 to 2004 but had incorrectly handled the self-employment taxes due as a result of his being employed by the International Monetary Fund.

TurboTax owner Intuit to pay $141 million to customers ‘unfairly charged’

Instead, it prompts the user for their login name and password at the financial institution or permits the data to be entered by hand. The service would be free for about one-third of U.S. taxpayers, while the IRS Free File products are free for about 70%, according to the announcement. Intuit, which owns TurboTax, has agreed to pay $141 million in restitution to 4.4 million low-income customers who were charged for using the TurboTax Free Edition, according to an announcement Wednesday. The attorney general’s office did not yet know how many people would receive a payment, but said there were 98,715 “affected Indiana transactions” in that 3-year time period. Intuit will provide the affected customers’ information to a settlement administrator hired by Indiana. The administrator will then contact Hoosier customers by mail or email to let them know they qualify for a settlement payment.

Do you lose money using TurboTax?

Using TurboTax will save you money.

You'll still pay more by using TurboTax than you would if you completed all the tax forms on your own. Thanks to the IRS website, you can fill out, then submit your forms electronically, without a fee.

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