In one of the TurboTax TV ads, a hiker shouted the word “free” and heard it echo back. In another, an auctioneer in a cowboy hat rattled off “free” over and over.
These were among a number of ads, repeatedly featuring the word “free,” that Mountain View financial software firm Intuit ran for its TurboTax e-filing products, including during major events such as the Super Bowl. The ads are highlighted in a settlement released today that is expected to give some 370,000 Californians about $30 for each year from 2016 to 2018 that they were deceived into paying for filing services that should have been, as the ads said, free.
“Today’s settlement holds Intuit accountable for intentionally misleading the public,” said Santa Clara County Counsel James Williams.
Williams, along with California Attorney General Rob Bonta and 50 other attorneys general, announced the agreement Wednesday, under which Intuit is to pay $141 million nationwide. The settlement comes after a multi-state investigation and lawsuits by Williams’ office and the Los Angeles City Attorney. Court approval of the settlement is expected shortly.
TurboTax is the largest e-filing tax preparer in the country, with about 40 million taxpayers using its online service every year, Bonta’s office said in a press release. Intuit, a $127 billion company that according to regulatory filings made between $971 million and $1.2 billion in profit in each year covered by the settlement, noted in an email to this news organization that it “admitted no wrongdoing” but “agreed to pay $141 million to put this matter behind it.”
Intuit executive vice-president Kerry McLean said in a blog post that the company “is clear and fair with its customers, including with the nearly 100 million Americans who filed their taxes free of charge with our products over the last 8 years.”
Eligible taxpayers, according to the settlement agreement, include any individual or joint-return filers who in tax years 2016, 2017 or 2018 were eligible to use the TurboTax “IRS Free File” service, began their tax returns using a TurboTax “Free Edition” service, were informed they were ineligible for a Free Edition service, and then paid for a TurboTax product. To be eligible, consumers must not have used the IRS Free File service in a previous tax year. Beneficiaries are expected to be mostly people who had low incomes or were active-service military members when they filed.
Once the settlement administrator identifies those who are eligible, settlement notices and checks will be sent automatically by mail, the settlement said.
According to Bonta’s office, investigators found that consumers were steered away from the IRS Free File service and toward the TurboTax Free Edition. Many taxpayers using the Free Edition were eligible for free services, but were instead falsely told they must pay for an upgrade costing anywhere from $59.99 to more than $200 to “accurately complete” their filing, Bonta’s office said. In many cases, taxpayers spent hours filling in the form before they were told to pay up, Bonta’s office said.
“Up until Intuit ceased its participation in the IRS Free File Program in 2021, TurboTax’s ‘Products and Pricing’ page did not list the IRS Free File product as an option,” Bonta’s office said. “The only way to access the product was through a convoluted and unintuitive path that started with TurboTax’s support database or certain posts on TurboTax’s blog.”
The states’ investigation was spurred by reporting in 2019 from the non-profit news outlet ProPublica, which concluded that Intuit had for 20 years “waged a sophisticated, sometimes covert war” to prevent the federal government from making tax filing easy and free. The company knew it was deceiving customers, ProPublica reported, citing an internal PowerPoint presentation about an analysis of customer calls. “The website lists Free, Free, Free and the customers are assuming their return will be free,” the presentation said. “Customers are getting upset.”
Intuit still faces a lawsuit filed in March by the Federal Trade Commission, which accused the company of misleading consumers through “bogus advertisements pitching ‘free’ tax filing.”
Source: www.mercurynews.com