NASHVILLE, Tenn. (WTVF) — In Tennessee, approximately 111,000 customers of Intuit Inc. will be eligible to receive payments of about $30 for each year they used a paid TurboTax product — if they qualified to file for free through the IRS system during tax years 2016-2018.
Tennessee's Attorney General Herbert H. Slatery III announced Wednesday that together with New York Attorney General Letitia James, $141 million was secured from Intuit for deceiving customers into paying for services that should have been free.
“The last thing anybody needs at tax time is more confusion and complexity over filing,” said Slatery. “I appreciate working with New York Attorney General Letitia James and coordinating with our fellow attorneys general on this settlement.”
Intuit was the subject of an investigation after ProPublica reported it used deceptive digital tactics to mislead low-income consumers away from federally-supported free tax services.
Intuit offered two free version of TurboTax. One partnered with the IRS Free File Program that allows military members and taxpayers earning roughly $34,000 to file at no cost — which represented about 70% of taxpayers. The other product, called its "freemium" product, was only free to one-third of U.S. taxpayers.
The multistate investigation found that Intuit engaged in several deceptive and unfair trade practices to limit consumers' participation in the IRS Free File Program, and created intentional confusion by naming its two products so similarly.
Intuit also bid on paid search advertisements to direct customers looking for the IRS Free File product to be redirected to the "freemium" product instead.
The company intentionally blocked its IRS Free File landing page from search engine results during the 2019 tax filing season, shutting out eligible taxpayers from reaping the benefits of the program.
The TurboTax website also included a "Products and Pricing" page that boasted it would "recommend the right tax solution," but it never recommended the IRS Free File program — not even for customers ineligible for the "freemium" product.
Impacted customers to receive restitution will automatically receive notices and a check by mail.
Intuit has also agreed to reform its business practices by:
- Refraining from making misrepresentations in connection with promoting or offering any online tax preparation products
- Enhancing disclosures in its advertising and marketing of free products
- Designing its products to better inform users whether they will be eligible to file their taxes for free
- Refraining from requiring consumers to start their tax filing over if they exit one of Intuit’s paid products to use a free product instead.
New York and Tennessee led the multistate investigation with support from the attorneys general of Florida, Illinois, New Jersey, North Carolina, Pennsylvania, Texas, and Washington. All 50 states and the District of Columbia joined this agreement. The states wish to think the Federal Trade Commission for its assistance in the investigation.
Interested parties may view the settlement online.