TurboTax Will Pay $141 Million In Settlement Over Allegedly 'Deceiving' Low-Income Americans
Approximately 4.4 million affected Americans will receive checks in the mail.
By Madeline Garfinkle •
Intuit, the parent company of the tax filing software, TurboTax, will pay $141 million in restitution to about 4.4 million Americans.
The 50-state settlement, led by New York Attorney General Letitia James, alleges that the company "tricked" low-income Americans by steering them away from free-tax filing services (for which they may have been eligible) and redirecting them to the paid version of its service, and were subsequently "unfairly charged."
"TurboTax's predatory and deceptive marketing cheated millions of low-income Americans who were trying to fulfill their legal duties to file their taxes," James said in a statement. "Today we are righting that wrong and putting money back into the pockets of hardworking taxpayers who should have never paid to file their taxes."
Eligible individuals include those who paid to file their federal taxes with TurboTax in 2016, 2017, and 2018, but were eligible to file for free through the IRS Free File Program — of which Intuit was formerly a partner until about two years ago.
Related: TurboTax Owner Intuit Slammed With FTC Lawsuit, Accusations of 'Bait-and-Switch' Advertising
In 2019, ProPublica published a report alleging that since Intuit's launch of its participation in the Free File program in 2003, it had gone to extreme lengths to limit the program's reach — from questionable lobbying tactics to adding code on the Free File landing page that made it virtually unreachable on search engines.
About two months after the story was published, the IRS imposed a new rule that prohibits major tax software companies (like Intuit) from hiding free tax filing options from search engines.
Then, in 2021, Intuit elected not to renew its participation in the Free File Program. The company attribution its decision due to "limitations" in the program and "conflicting demands from those outside the program."
In a May 2022 blog post regarding the 50-state settlement, Intuit said "In coming to a resolution on this matter, we admitted no wrongdoing and are pleased to be able to continue our strong partnership with governments to best serve the needs of taxpayers across the country." In Entrepreneur's request for comment about the allegations, the company referred to the aforementioned post from last May.
Those affected by the settlement will receive an email, and a check will be sent in the mail through the month of May 2023. Most eligible individuals will receive about $30, though others may receive up to $85 based on the number of years they qualify. More information about the settlement can be found here.
