NEW YORK: TurboTax, the company behind the tax-filing program, will pay $141,000,000 to all customers in the United States who were misled by false promises of tax-filing services. This was announced Wednesday by New York’s Attorney General.
According to Letitia James, New York Attorney General, Intuit Inc., Mountain View, California-based Intuit Inc., will suspend TurboTax’s “free, no, and free” advertising campaign and pay restitution for nearly 4.4 million taxpayers.
James stated that her investigation into Intuit began after a 2019 ProPublica Report revealed that the company was using deceptive techniques to steer low-income tax filers away from federally funded free services. Instead, it was using its commercial products.
Intuit has been misleading the most vulnerable people to make a profit for years. James stated that today, all 50 states are holding Intuit responsible for defrauding millions of taxpayers and that millions of dollars will be returned to the pockets of the impacted Americans. This agreement should be a reminder for all companies, large and small, that deceptive marketing tactics are illegal.
Intuit claims it has never been guilty of wrongdoing
Representatives for Intuit stated Wednesday in a blog that Intuit had agreed to admit no wrongdoing and to pay $141 million to resolve the matter. They also made certain promises regarding their advertising practices. “Intuit already follows most of these advertising practices, and expects the minimal business impact from the implementation of any remaining changes.”
Intuit provided two versions of TurboTax for free up until last year. The other was through Intuit’s participation in the Internal Revenue Service’s Free File Program. This program is geared towards taxpayers with a minimum of $34,000, as well as military personnel. Intuit announced that it had withdrawn from the program in July 2021. The company stated in a blog post, that they could offer more benefits without having to follow the limitations of the program.
The company also offers a product called “TurboTax Free Edition”, which is available only to taxpayers who have “simple returns,” according to Intuit.
ProPublica documents reveal that Intuit executives knew they were misleading customers by advertising services that weren’t free for everyone.
An internal PowerPoint presentation from the company stated that “The website lists Free or Free, and customers assume their return will be free.” Customers are becoming upset.
Intuit has agreed to compensate consumers who used the TurboTax Free Edition commercially for tax years 2016-2018 and were told they needed to file even though the TurboTax Free Edition was available as part of the IRS Free File program.
James stated that consumers will receive a $30 direct payment for every year they are deceived into paying filing services. They will receive notices and checks via mail.
Intuit spokesperson said that “We empower customers to take control over their financial lives which includes tax preparation,” in a statement released by the company in 2019.
A spokesperson said that the government-run, pre-filled tax preparation system makes the tax collector (who also acts as the investigator, auditor, and enforcer) the tax preparer. This is fraught with conflicts.
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