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Intuit, the owner of the popular TurboTax tax reporting software, will pay $ 141 million in restitution to millions of low-income Americans who have been “unfairly charged” for services that should have been free, according to a multistate. agreement announced Wednesday.
TurboTax has also agreed to reform its business practices. For example, it must suspend a “free, free, free” advertising campaign that “lured” customers with the promise of free tax preparation but then asked them to pay, according to one. announcement by New York Attorney General Letitia James.
All 50 states and the District of Columbia signed the agreement.
Intuit will pay a refund to nearly 4.4 million consumers who used the free edition of TurboTax during the fiscal years 2016 to 2018. These customers were told they had to pay for the service despite being eligible to apply for free via the IRS Free File program offered through TurboTax, according to the announcement.
Consumers are expected to receive about $ 30 for every year they paid for the services, the ad says. Consumers will automatically receive alerts and verify by mail.
An Intuit spokesperson did not immediately return a request for comment.
“Intuit cheated millions of low-income Americans by the free tax reporting services they were entitled to,” James said in a statement. “For years, Intuit has been deceiving the most vulnerable among us to make a profit. Today, every state in the nation holds Intuit accountable for scamming millions of taxpayers and we are putting millions of dollars back in the pockets of affected Americans.”
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Until recently, Intuit offered two free versions of TurboTax. One was through the IRS Free File Program, a public-private partnership that allows low-income Americans to file taxes for free. Intuit ended its holding in July 2021 (it was available to taxpayers with income less than about $ 39,000, according to a previous complaint by the Federal Trade Commission.)
Intuit has aggressively marketed another version (the TurboTax Free Edition) as “free,” but it is only free for taxpayers with “simple” returns as defined by Intuit, according to the announcement. Users without a simple declaration must upgrade to a paid version of the tax service.
(For fiscal year 2021, Intuit refers to a simple statement such as that can be filed on a 1040 form with limited attachments, such as one that includes interest paid on the student loan, according to to the FTC.)
The service would be free for about one-third of U.S. taxpayers, while IRS Free File products are about 70 percent free, according to the announcement.
This is an evolving story. Check again for updates.