TurboTax has been ordered to pay $141 million to customers for the false advertisement of its tax services.
New York Attorney General Letitia James announced the ruling on Wednesday following a settlement agreement. Per the deal, TurboTax will reimburse almost 4.4 million taxpayers. According to the Attorney General’s investigation, TurboTax’s parent company, Intuit, targeted low-income taxpayers by steering them towards Intuit products rather than the free federal tax services that most of them qualified for.
Intuit withdrew from the IRS Free File Program, meant to benefit taxpayers earning $34,000 or less, in July 2021. The company claimed that it could offer increased benefits without the program limitations. Intuit also offered “TurboTax Free Edition,” which was supposedly free for taxpayers submitting “simple returns.” The investigation found Intuit knew they were wrongly advertising their products as free to everyone. In March, the Federal Trade Commission issued a formal complaint against Intuit, claiming two-thirds of eligible filers didn’t qualify for TurboTax Free Edition in 2020. During the 2019 tax season, Intuit was also found to have banned the IRS Free File landing page from search engine results. Internal documents revealed that the company was aware of the deceptive practices and took no steps to correct them.
Under the plea agreement, Intuit will not have to admit to any wrongdoing. However, they must suspend TurboTax’s “Free, free, free” ad campaign that “lured” unsuspecting taxpayers in addition to the restitution.
Eligible customers should expect a $30 check for each year they were wrongly charged.
