Intuit to pay $141 million over deceptive ‘free’ TurboTax e-filing claims

Intuit, the company behind the TurboTax software package for preparation of income tax returns, will pay $141 million to customers across the United States deceived by the company’s misleading promises of free tax-filing services, New York Attorney General Letitia James announced Wednesday.

“Intuit cheated millions of low-income Americans out of free tax filing services they were entitled to,” James said in a statement regarding the multi-state deal that also includes Washington, D.C. “For years, Intuit misled the most vulnerable among us to make a profit. Today, every state in the nation is holding Intuit accountable for scamming millions of taxpayers, and we’re putting millions of dollars back into the pockets of impacted Americans. This agreement should serve as a reminder to companies large and small that engaging in these deceptive marketing ploys is illegal. New Yorkers can count on my office to protect their wallets from white-collar scammers.”

Per the terms of the settlement, signed by the attorneys general of all 50 states, Mountain View, California-based Intuit, Inc. will suspend TurboTax’s well-known “free, free, free” ad campaign and pay restitution to nearly 4.4 million taxpayers.

In Washington state, the deal translates into Intuit returning more than $3.75 million to 121,102 taxpayers who paid for the company’s software. Intuit did not make customers aware they were eligible to file their federal taxes for free via the Internal Revenue Service’s Free File program.

“I will continue holding corporate interests accountable when they deceive Washingtonians into paying millions of dollars for a free service,” state Attorney General Bob Ferguson said in a press release. “Intuit’s deceptively earned profits will return to hardworking Washington families to help pay for groceries, car payments and other needs.”

In addition to the restitution, the resolution – which was filed in King County Superior Court – requires Intuit to notify customers in a timely manner when they are eligible to file for free through the IRS, and to clearly disclose eligibility limitations on the company’s own free tax filing software.

According to details of the resolution, eligible Washington residents should receive a $30 payment for each year they were deceived into paying for filing services. Those customers, identified in Intuit’s records, will be contacted automatically.

The various state investigations of Intuit were prompted by a 2019 ProPublica report that accused the company of steering eligible clients away from the federal government’s tax filing products by making them difficult to find in online searches, and instead directing people toward the company’s own commercial products.

In a statement, Intuit downplayed the deal and said it "expects minimal impact to its business from implementing the remaining changes going forward."

“Intuit is pleased to have reached a resolution with the state attorneys general that will ensure the company can return our focus to providing vital services to American taxpayers today and in the future,” said Kerry McLean, Intuit’s executive vice president and general counsel, in the statement. “Intuit is clear and fair with its customers, including with the nearly 100 million Americans who filed their taxes free of charge with our products over the last 8 years – more than all other tax prep software companies combined. In coming to a resolution on this matter, we admitted no wrongdoing and are pleased to be able to continue our strong partnership with governments to best serve the needs of taxpayers across the country.”