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Intuit, owner of TurboTax tax filing software, has agreed to a $141 million settlement following a Federal Trade Commission complaint that it tricked millions of Americans into paying for filing services online income that should have been free.
In July 2021, Intuit withdrew from the IRS Free File Alliance to launch TurboTax Free Edition, which it said customers with “simple tax returns” who used IRS Form 1040 could use for free.
In March, the FTC sued Intuit, alleging that in 2020 alone, two-thirds of eligible filers could not use TurboTax Free Edition, including gig workers and people who earned farm income. Investigators said Intuit also engaged in deceptive marketing and marketing practices, intentionally blocking its IRS Free File landing page from search engine results. The company also lured people in with ads touting its free edition “solely to get them to pay,” according to New York Attorney General Letitia James, who brokered the multistate settlement.
“For years, Intuit has deceived the most vulnerable among us for profit,” James said in a May 4 statement. “This agreement should remind businesses large and small that engaging in these deceptive marketing schemes is illegal.”
As part of the settlement, Intuit agreed to suspend TurboTax’s “Free, Free, Free” advertising campaign, to better inform its users if they are eligible to file for free and to improve disclosures in its advertising.
In a statement, Intuit admitted no wrongdoing and said it accepted the deal to “put this matter behind it.”
Who is eligible for the TurboTax settlement?
Intuit will provide restitution to nearly 4.4 million people in all 50 states who used the free edition of TurboTax between tax years 2016 and 2018.
These people were told they had to pay to file their return, even if they qualified for the IRS Free File program, a partnership between the agency and major tax preparation software companies. Individuals and families with an adjusted gross income of less than $73,000 are generally eligible for the Free File program, as are members of the military.
How do I know if I am eligible?
No action needs to be taken, according to Halimah Elmariah, spokeswoman for the New York State Attorney’s Office. Eligible TurboTax users will receive notification, either by email or letter.
How do I file a claim with TurboTax?
According to James’ office, eligible people will automatically receive a direct payment of about $30 for each year they were tricked into paying for deposit services. The checks will come from the settlement of $141 million, less $2.5 million in administrative fees.
When will I receive my payment?
Because the settlement involves multiple states, payments will be handled by a third-party administrator, Elmariah told CNET. An exact timeline has yet to be determined, but she said she expects checks to be sent out in the coming months.