According to a press release, Idaho Attorney General Lawrence Wasden announced the state will receive $843,000 from Intuit, the owner of TurboTax, for misleading consumers into paying for tax services that should have been free.
After reaching a settlement with all fifty states and the District of Columbia, Intuit will pay $141 million in restitution. According to the release, 27,237 customers in Idaho will receive approximately $30 per check for tax years 2016 through 2018. Affected consumers will receive notices and a check automatically by mail. It is anticipated that consumers will receive a direct payment of roughly $30 for each year they were duped into paying for filing services.
The company is also required to suspend TurboTax’s “free, free, free” advertising campaign, which deceived customers into paying for services by promising free tax preparation services.
Wasden stated in the release that Intuit tricked thousands of Idahoans into paying for services that should have been free. However, the company was caught, and the settlement now requires it to pay for its wrongdoings.
“As part of the settlement, Intuit admitted no wrongdoing, agreed to pay $141 million to put this matter to rest, and made certain commitments regarding its advertising practices,” the company wrote in a blog post published Wednesday. “Intuit already adheres to the majority of these advertising practices and anticipates that future implementation of the remaining changes will have minimal impact on its business.”
ProPublica reported that Intuit was using deceptive digital tactics to steer low-income consumers toward its commercial products and away from federally-supported free tax services, according to a press release. Intuit has provided two complimentary versions of TurboTax: One was through its participation in a public-private partnership with the Internal Revenue Service, which allowed taxpayers earning approximately $34,000 and military personnel to file their taxes for free.
In exchange, the IRS agreed not to compete with Intuit and other tax-preparation companies by offering taxpayers its own electronic tax preparation and filing services.
According to a press release, Intuit also offers a commercial product called “TurboTax Free Edition,” which is free for taxpayers with “simple returns” as defined by Intuit. However, the company’s product is only free for about one-third of U.S. taxpayers, whereas the IRS Free File product was free for approximately 70 percent of taxpayers.
In a settlement, Intuit, the owner of TurboTax, agreed to reform its business practices.
According to the release, a multistate investigation determined 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 its IRS Free File product and commercial product.
During the 2019 tax filing season, Intuit blocked its IRS Free File landing page from search engine results on purpose, effectively preventing 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 the following aspects of its business practices:
- Refraining from making misrepresentations in connection with promoting or offering any online tax preparation products;
- Increasing disclosures in its advertising and marketing of free products;
- Designing its products to better inform users whether they are eligible to file their taxes for free;
- and Refraining from requiring consumers to restart their tax filing if they switch from one of Intuit’s paid products to a free product.