Intuit, the company behind the TurboTax tax-filing program, has agreed to pay $141 million to customers across the United States who were charged for using free tax filing services.
According to the Associated Press, the company will do so in accordance with the terms of a settlement signed by the attorneys general of all 50 states. Intuit Inc., based in Mountain View, California, will also suspend TurboTax’s “free, free, free” advertising campaign and compensate nearly 4.4 million taxpayers.
According to the agreement, Intuit will compensate taxpayers who were charged for filing their taxes while using the commercial TurboTax Free Edition for tax years 2016 through 2018, despite the fact that those taxpayers were eligible for the free version of TurboTax offered as part of the IRS Free File program.
According to the report, consumers who are eligible for restitution will be automatically notified by the company and will receive a direct payment of approximately $30 for each year that they were unfairly charged for tax filing services.
Intuit has reached an agreement with the attorneys general of all 50 states and the District of Columbia to compensate taxpayers who were overcharged for tax filing services that were advertised as free. TurboTax products are shown on display in a store.
The settlement comes after the Federal Trade Commission (FTC) filed a lawsuit against Intuit earlier this year, alleging that TurboTax advertising was purposefully misleading and led users to believe the service was free.
“Intuit defrauded millions of low-income Americans of free tax filing services,” said New York Attorney General Letitia James in a statement. “Intuit deceived the most vulnerable among us for years in order to make a profit.” Today, every state in the country is holding Intuit accountable for defrauding millions of taxpayers, and we’re putting millions of dollars back into the pockets of those who have been harmed. This agreement should serve as a reminder to both large and small businesses that engaging in deceptive marketing tactics is illegal.”
TurboTax, according to the FTC, primarily advertises its free services to consumers across the country, with two-thirds of tax filers opting not to purchase one of their premium options in 2020. The lawsuit, on the other hand, claimed that the service unfairly taxed gig workers and independent contractors for failing to file their taxes.
“As part of the agreement, Intuit admitted no wrongdoing, agreed to pay $141 million to put this matter behind them, and made certain commitments regarding its advertising practices,” according to the post. “Intuit already follows the majority of these advertising practices and expects the remaining changes to have little impact on its business in the future.”
“Intuit is pleased to have reached an agreement with the state attorneys general that will allow us to return our focus to providing vital services to American taxpayers today and in the future,” said Kerry McLean, executive vice president and general counsel at Intuit.
“We believe that this settlement with the state attorneys general and the District of Columbia also addresses the issues at the heart of the FTC litigation, rendering that lawsuit obsolete.” Nonetheless, McLean stated, “we are fully prepared to litigate with the FTC to prove the merits of our case.”
Senator Elizabeth Warren of Massachusetts, a Democrat, praised the agreement in a tweet on Wednesday. “This $141 million settlement is a good first step toward accountability,” she said, “but the IRS also needs to finally set up a truly free, simple tax filing service.”