If you use TurboTax, you may be eligible for some compensation after Intuit, the company behind the tax filing software, agreed to pay $141 million.
Intuit has been compelled to shell out $141 million after it cheated millions of low-income American taxpayers. The agreement was reached with the New York Attorney General, Letitia James, and officials from all 50 states and DC. It would be compensation for customers tricked into paying for what should have been a free service.
In addition, Intuit is required to change its marketing methods.
The company will pay its users $30 for each year they were deceived into paying for using TurboTax between 2016 and 2018. If you are affected, you will get a notice and a check through email. This means you could be $90 richer. However, $2.5 million is set aside for administrative purposes. New York users of Turbo Tax will get more than $5.4 million.
TurboTax has been mired in many controversies due to its deceptive marketing practices and unclear charging terms. For instance, the software had two versions that included the word “free” but did bill unwary people who used them. Intuit included “free” multiple times in the advert, but it charged almost 4.5 million people.
The actual free tax filing software was the Free File version, which the Internal Revenue Service created in collaboration with tax companies, including Intuit. The effort was to ensure American taxpayers have free access to do their filings. The collaboration prevented the IRS from making its own competing platform, but Intuit made the Free File version hard to get by the consumers.
Intuit actually stopped being a part of Free File last year because of what it claims to be conflicting demands from those outside the program. However, it came after the IRS forced tax companies from concealing the unpaid version of their filing solutions. Intuit and H&R Block alleged blocked their free services from appearing on search engines. Also, the IRS can now make its own tax filing app but has yet to do so.
Meanwhile, lawmakers have been interested in Intuit’s business practices. For example, Senator Elizabeth Warren accused the company of lobbying to protect its shady business and bilking unsuspecting American taxpayers for services that shouldn’t have cost a dime.
The FTC has also sued Intuit for misleading advertisements. A hearing is scheduled for September.
As part of the agreement with the NYAG, Intuit will cease misrepresenting its TurboTax offerings, make disclosures stand out in its ad materials, be very clear in its software when a user is using the unpaid version, and stop forcing customers to start filing from scratch when they move from a paid product to a free one.
“Intuit cheated millions of low-income Americans out of free tax filing services they were entitled to,” said 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.”