TurboTax Owner Intuit Ordered to Pay a $141 Million Settlement: Are You Owed Money?
- TurboTax promoted a free consumer tax-filing solution to taxpayers who weren't eligible.
- The brand must now pay a $141 million settlement and change its advertising practices.
TurboTax customers who paid to file their taxes despite qualifying for free filing are now owed money.
Many U.S. taxpayers use online tax software to complete their tax returns. This software guides users through the filing process. Due to its advertising practices, TurboTax must pay a $141 million settlement. If you've used TurboTax to file your taxes in the past, you may be owed money. Keep reading to find out.
Tax time can be stressful, and many people rely on online tax software to simplify the process. Some brands offer free tax-filing solutions, but many also have paid software options.
Intuit, the owner of TurboTax, is one brand that has offered both free and paid software solutions throughout the years. But the company has received backlash for some of its advertising practices that promoted free software to taxpayers who didn't qualify for it.
The brand's advertising practices misled consumers
A ProPublica report that examined Intuit's advertising practices led to an investigation by New York Attorney General Letitia James.
Until recently, TurboTax was a part of the Internal Revenue Service's (IRS) Free File program. The program partnered online tax preparation companies with the IRS to offer free federal tax return filing. It was geared toward military members and taxpayers with incomes of around $34,000 or less.
TurboTax cut ties with the program in July 2021. Instead, it offers a commercial product called TurboTax Free Edition. This free program was only made available to taxpayers with simple returns.
However, the brand promoted its TurboTax Free Edition product in ways that made it appear as if it was free to all taxpayers regardless of their tax situation.
The brand also used advertising strategies to target taxpayers looking for free software solutions. This included directing taxpayers who were looking for the IRS Free File program to the TurboTax Free Edition, even though they would not be eligible and would have to pay to file their returns.
TurboTax must pay $141 million to customers
On May 4, 2022, Intuit entered into an agreement with all 50 state attorneys general and the District of Columbia. The brand admitted no wrongdoing.
As part of the agreement, Intuit was ordered to pay $141 million to those impacted. Nearly 4.4 million taxpayers across the United States will be eligible for restitution.
In addition, the company must also suspend its "free, free, free" advertising campaign, which misled customers toward a free product they weren't eligible to use.
Are you owed money?
If you've used TurboTax previously, you may be wondering if a check is coming your way.
Under the agreement, Intuit will provide restitution to consumers who used the commercial TurboTax Free Edition for the tax years 2016 through 2018 and were told to pay to file, even though they were eligible for the IRS Free File program.
At this time, you don't need to do anything to claim your money. The company will reach out to eligible taxpayers. If you qualify for restitution, you can expect to receive a direct payment of around $30 for every year you were impacted.
If you plan to use tax software in the future, review all eligibility requirements before beginning your return to avoid being charged unexpected fees.
For additional tax preparation tips, check out our Complete Guide to Taxes.
Alert: highest cash back card we've seen now has 0% intro APR until 2025
This credit card is not just good - it's so exceptional that our experts use it personally. This card features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes.
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2024 The Ascent. All rights reserved.