Idaho Attorney General Lawrence Wasden announced the state will receive $843,000 from the owner of TurboTax, Intuit, for deceiving consumers into paying for tax services that should have been free. (Otto Kitsinger for the Idaho Capital Sun)
Idaho Attorney General Lawrence Wasden announced the state will receive $843,000 from the owner of TurboTax, Intuit, for deceiving consumers into paying for tax services that should have been free, according to a press release.
Intuit will pay $141 million in restitution after agreeing to a settlement with all 50 states and the District of Columbia. In Idaho, 27,237 customers will receive checks for about $30 each for tax years 2016 through 2018, the release said. Affected consumers will automatically receive notices and a check by mail. Consumers are expected to receive a direct payment of approximately $30 for each year that they were deceived into paying for filing services.
The company is also required to suspend TurboTax’s “free, free, free” ad campaign that lured customers with promises of free tax preparation services, only to deceive them into paying for services, the release said.
“Intuit tricked thousands of Idahoans into paying for services that should have been free,” Wasden said in the release. “But the company got caught and this settlement now forces it to pay for its misdeeds.”
“As part of the agreement, Intuit admitted no wrongdoing, agreed to pay $141 million to put this matter behind it, and made certain commitments regarding its advertising practices,” Intuit said in a blog post on its website Wednesday. “Intuit already adheres to most of these advertising practices and expects minimal impact to its business from implementing the remaining changes going forward.”
An investigation into Intuit began after ProPublica reported that the company was using deceptive digital tactics to steer low-income consumers toward its commercial products and away from federally-supported free tax services, the release said. Intuit has offered two free versions of TurboTax: One was through its participation in a public-private partnership with the Internal Revenue Service allowing taxpayers earning roughly $34,000 and members of the military to file their taxes for free. In exchange, the IRS agreed not to compete with Intuit and other tax-prep companies by providing its own electronic tax preparation and filing services to American taxpayers.
Intuit also offers a commercial product called “TurboTax Free Edition,” which is only free for taxpayers with “simple returns” as defined by Intuit, the release said. But the company’s product is only free for approximately one-third of U.S. taxpayers, while the IRS Free File product was free for 70% of taxpayers.
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Intuit, owner of TurboTax, agreed to reform business practices under settlement
According to the release, the multi-state investigation found that Intuit engaged in several deceptive and unfair trade practices that limited consumers’ participation in the IRS Free File Program, such as using confusingly similar names for both its IRS Free File product and its commercial product. The investigation also found Intuit purposely blocked its IRS Free File landing page from search engine results during the 2019 tax filing season, effectively shutting out eligible taxpayers from filing their taxes for free. The TurboTax website also included a “Products and Pricing” page that stated it would “recommend the right tax solution,” but never displayed or recommended the IRS Free File program, even when consumers were eligible for the free product.
Intuit has also agreed to reform its business practices, including:
- Refraining from making misrepresentations in connection with promoting or offering any online tax preparation products;
- Enhancing disclosures in its advertising and marketing of free products;
- Designing its products to better inform users whether they will be eligible to file their taxes for free; and
- Refraining from requiring consumers to start their tax filing over if they exit one of Intuit’s paid products to use a free product instead.
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