TurboTax Is Hit With Restrictions After 'Deceptive Advertising'

We're nearing the end of January, so tax season is underway. If you're starting to prepare your taxes and are getting ready to file soon, make sure you understand the filing fees you'll be expected to pay when using online tax software so you can prepare for the expense.

Unfortunately, some tax-prep companies haven't been transparent about the fees they charge. On Jan. 22, the Federal Trade Commission (FTC) issued an opinion and final order to Intuit, the maker of tax-filing software TurboTax.

Intuit was found to have engaged in "deceptive advertising" strategies. Due to these findings, Intuit was ordered to abide by advertising restrictions. Learn more about this news and what you should consider before deciding which tax-filing service or software to use.

Intuit engaged in "deceptive advertising"

On Jan. 22, the FTC released a final opinion and final ruling stating that Intuit engaged in "detective advertising," violating FTC Act 5. This Commission upheld a September 2023 ruling from Chief Administrative Law Judge (ALJ), D. Michael Chappell, agreeing that Intuit had deceived customers when it had run TurboTax advertisements for "free" tax products, even though many of its customers were ineligible.

Intuit must alter its advertising strategies

Intuit was ordered to follow specific advertising restrictions in response to these findings. In its Jan. 22 order, the FTC prohibits Intuit from advertising any of its goods or services as free unless it's free to all customers or disclosure requirements are met.

TurboTax advertisements can be marketed as free if Intuit includes disclosures. Intuit must disclose the percentage of taxpayers or consumers who qualify for the free product or service. Alternatively, the company can instead disclose that a majority of consumers don't qualify for the product or service.

Intuit must state clearly and conspicuously and in close proximity to any free claim. The order also requires Intuit to disclose all the terms, conditions, and obligations required to obtain the free product or service. While the advertisement doesn't have to include all terms, conditions, and obligations, Intuit must include a link that provides more details.

The order prohibits Intuit from misrepresenting material facts about its products and services. This includes its prices, refund policies, or customers' ability to accurately claim a tax credit or deduction to file their taxes online without using a paid TurboTax service.

Review pricing details before filing your taxes

This news is a good reminder for consumers to be alert for deceptive marketing strategies because misleading advertising can impact your bank account balance. It's wise to review pricing details before filing your tax returns. With accurate pricing information, you can choose a tax-preparation service that works best for your personal finances.

Some taxpayers may qualify for free tax preparation services. Review requirements to confirm eligibility. For the 2023 tax season, the IRS Free File program is available to eligible taxpayers with an adjusted gross household income of up to $79,000. Through this program, the IRS partners with select online tax-filing providers.

However, some included providers set additional age or income threshold restrictions, so review all eligibility details before you file your taxes to confirm eligibility. You may be required to pay a fee to file your state income tax return. Check out our tax resources for additional guidance.