TurboTax Settles Lawsuit for $141 Million

Jun 12, 2023 | Blog

The New York Attorney General has stated that TurboTax will be sending approximately $141 million to American taxpayers as part of a court settlement. The agreement was reached last year by Intuit, the parent company of TurboTax, after they were accused of misleading their tax clients by charging money for services that could have been obtained at no cost. A back taxes attorney or any attorney familiar with such services would probably agree that customers should be steered away from paying for any type of help that is otherwise available for free.

Allegations of Deceptive Trade Practices

Although Intuit did not agree to any wrongdoing, it is alleged that they used unfair and deceptive trade practices to take money from clients when free options were available. The settlement terms included Intuit’s agreement to suspend the “Free, Free, Free” ad campaign being run by TurboTax and make restitution to approximately 4.4 million taxpayers who utilized the Free Edition of TurboTax from 2016 to 2018.

Direct payments will go to customers who are impacted by the alleged deception. Such individuals can expect to receive an automatic payment of approximately $30 for each year that they paid for TurboTax services that were then touted as free.

New York Attorney General Makes Statement

An IRS tax attorney in San Jose has learned of an announcement made by Leticia James, New York Attorney General. James announced that throughout May, checks will be sent to former TurboTax customers, and stated that millions of low income Americans fell prey to the deceptive and predatory marketing practices of TurboTax and were subsequently cheated when all they were trying to do was abide by the law and file their taxes.

Deception Alleged by a 2019 ProPublica Report

Intuit does offer a free edition of TurboTax for filers who are submitting what is referred to by the company as a “simple return.” However, only approximately one third of US taxpayers qualify for this “freemium” product, which according to James, was marketed aggressively. Meanwhile, “Free File,” the Internal Revenue Service’s own free product is available to approximately 70 percent of filers.

The investigation was sparked by a 2019 A ProPublica report, which claimed that executives at Intuit were well aware that customers were being deceived.

Intuit Denies Wrongdoing

According to San Jose tax lawyers, all 50 states and the District of Columbia signed the settlement agreement once it was reached. General Counsel Kerry McLean and Intuit Executive Vice President stated in a blog post that they were pleased to have reached resolution.

McLean pointed out, however, that neither TurboTax nor Intuit admitted to any wrongdoing, and stated that the companies were dedicated to continuing to serve the needs of American taxpayers in the future. McLean also claimed that Intuit and TurboTax were always fair and clear with their clients concerning various services, and that over the last eight years, almost 100 million taxpayers filed their returns free of charge using Intuit’s products.

It’s always wise for American taxpayers to consult a tax professional or back taxes attorney to discover the best option for filing tax returns and paying any outstanding tax bills.