TurboTax’s owner, Intuit Inc. (Intuit), was fined $141 million on May 4 by Tennessee Attorney General Herbert H. Slatery III and New York Attorney General Letitia James, respectively, for defrauding consumers into paying for tax services that should have been free.
In addition to the District of Columbia, all 50 states have agreed to the terms of the agreement.
For every year from 2016 to 2018 in which they used a paid TurboTax product when they were eligible to file for free through the IRS programme, approximately 111,000 Tennessee consumers will be eligible for payments of around $30.
This is the last thing anyone wants during tax season, according to General Slatery: “more confusion and complexity in the filing.”
With New York Attorney General Letitia James and our colleagues in the Attorney General’s Office, this settlement was a pleasure.”
By using deceptive digital tactics to steer low-income consumers away from federally funded free tax services and toward its commercial products, Intuit was investigated by ProPublica.
Intuit offers two versions of TurboTax for free. Taxpayers earning less than $34,000 and active duty military personnel can take advantage of the IRS Free File Program, a public-private partnership with the Internal Revenue Service (IRS). Due to their participation, IRS agreed not to compete with Intuit and other tax preparation companies by providing their own electronic tax preparation and filing services to American taxpayers.
TurboTax “freemium” is only available to about one-third of US taxpayers, even though Intuit offers a commercial product called “TurboTax Free Edition,” which is only free for taxpayers with what Intuit defines as “simple returns.” It was free for 70% of taxpayers to use the IRS Free File product.
Consumer participation in the IRS Free File Program was restricted as a result of Intuit’s deceptive and unfair business practices, as revealed by the multistate investigation.
For its IRS Free File product and “freemium” product, the company created confusion by using similar names. Pay-per-click advertising was used by Intuit to redirect customers looking for the IRS Free File product to the TurboTax “freemium” product.
The IRS Free File landing page was intentionally removed from search engine results by Intuit during the 2019 tax filing season. This prevented those taxpayers who qualified to use the IRS Free File service from doing so.
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It was revealed in July 2021 that Intuit would no longer be taking part in the Free File programme offered by the Internal Revenue Service.
Co-leading the investigations were the states of New York and Tennessee, which received assistance in their work from the attorneys general of several other states as well.
This agreement was signed by all fifty states and by the District of Columbia as well.
According to the findings of the multistate investigation, Intuit engaged in deceptive and unfair business practices, which led to a reduction in the amount of consumer participation in the Free File Program offered by the IRS.
