TurboTax Users May Be Due a Refund

(KNSI) — Thousands of taxpayers who used TurboTax from Intuit to file are likely due a refund after a settlement with the online tax preparer.

Attorneys General from all 50 states and the District of Columbia signed onto a lawsuit saying the company deceived consumers into paying for tax services that should have been free. TurboTax parent company Intuit will have to pay $141 million in restitution and suspend its “free, free, free” advertising campaign as part of the settlement agreement. Prosecutors say the ad campaign lured customers in with promises of free tax prep services, only to push them into paying for services that were initially promised as free.

As many as 60,000 Minnesotans were eligible for free filing but were defrauded into paying. They will be getting at least partial refunds under the settlement.

According to a press release, the settlement comes after nearly two years of investigation. Intuit was required to provide a free tax-filing program to low-income taxpayers; in exchange, the IRS agreed not to compete with Intuit and other tax-prep companies by providing its own electronic tax preparation and filing services.

The lawsuit alleged Intuit’s for-pay service was deceptively branded and titled as being free, using the name “TurboTax Free Edition,” while the company’s free filing program that it offered under its agreement with the IRS and was actually free did not indicate that the service was free. Intuit is also accused of bidding on paid search advertisements to deceptively direct consumers who were looking for free tax preparation services to its for-pay service instead.

The company is also accused of occasionally making its free filing product deliberately inaccessible from search engines, even when consumers searched for free tax preparation services.

The state’s investigation also revealed the misleading nature of Intuit’s widespread advertising campaigns. In some ads, the company repeated the word “free” dozens of times in ads as short as 30 seconds. These ads, however, promoted an Intuit tax preparation product that was free to only approximately one-third of U.S. taxpayers and did not contain adequate disclosures that the product most likely would cost consumers money.

Under the agreement, Intuit will provide restitution to millions of consumers who started using TurboTax’s Free Edition for tax years 2016 through 2018 and were told that they had to pay to file even though they were eligible to file for free using the version of TurboTax offered as part of the IRS’s free filing program. Consumers are expected to receive a direct payment of approximately $30 for each year that they were deceived into paying for filing services. Impacted consumers will automatically receive notices and a check by mail.

Intuit withdrew from the IRS Free File program in July 2021.

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