Intuit to Pay $141 Million to Americans Deceived by TurboTax

Intuit to Pay $141 Million to Americans Deceived by TurboTax

Update (May 11, 2023)

Roughly 4.4 million people will soon receive checks from TurboTax, following a settlement between the parent company Intuit and all 50 states. The lawsuit alleged that TurboTax steered millions of low-income Americans away from free tax-filing services.

Customers affected by the settlement will receive an email about the settlement and checks will automatically be mailed throughout this month. Most customers will get about $30, with some customers that used TurboTax for three consecutive years getting up to $85. A website has also been set up for more information.

Original article (May 16, 2022)

Intuit, the California firm that owns TurboTax, has agreed to pay $141 million in restitution to millions of consumers who were unfairly charged for tax services that should have been free. All 50 states and the District of Columbia have signed onto the agreement. It comes after an investigation found the company misled low income Americans into paying to file their annual taxes.

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.

Lawsuits and investigations were first launched back in 2019. TurboTax’s free filing service is offered in partnership with the IRS and is meant to benefit 70 percent of U.S. taxpayers with adjusted gross incomes of $66,000 or less ($73,000 or less in 2021). TurboTax violated its agreement with the IRS by separating its free filing page from its primary service as well as by intentionally hiding the service from search engines by altering its code. Additionally, TurboTax is accused of using language meant to lead taxpayers to believe that its primary service is free only to later charge them. Intuit withdrew from the IRS Free File program in July 2021.

“Intuit cheated millions of low-income Americans out of free tax filing services they were entitled to,” said New York Attorney General James. “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. This agreement should serve as a reminder to companies large and small that engaging in these deceptive marketing ploys is illegal. New Yorkers can count on my office to protect their wallets from white-collar scammers.”

Intuit will pay $141 million in restitution, of which roughly $2.5 million will be used for administrative fund costs.

Under the agreement, Intuit will provide restitution to nearly 4.4 million consumers who started using TurboTax’s Free Edition for tax years 2016 through 2018 and were told that they had to pay to file even though they were eligible to file for free using the IRS Free File program offered through TurboTax. Consumers are expected to receive a direct payment of approximately $30 for each year that they were deceived into paying for filing services. Impacted consumers will automatically receive notices and a check by mail.