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FTC Sues TurboTax Owner Intuit Over False Advertising

edited March 29 in Other Investing


  • I often see the “free” TurboTax tax filing from Fidelity and on TV, but it looks too good to be true. They always include a disclaimer that the offer is for simple tax cases.

    I suspect many of these filers may have few items to report to IRS such a single income, no investment, and takes the standard deduct. When filing for state tax return, TurboTax charge $20 per state claimed (say the filers moved during the year). So the Federal tax return may be free, one still have to pay for the state.
  • Actually in MN the TT filing fee is $25 which is about what I'd pay to print out and mail the federal (required) and state forms to the state.
  • It's not just free, it's "free, free, free, free, free, free, free". Did I forget to mention, it's free?

    What I find disturbing is that the disclaimer is written in hidden legalise that is easy to miss or misunderstand. That's especially true for people struggling to fill in even these "simple" forms.

    The image doesn't contain an asterisk to indicate that there's a pop up description of "simple", at least if you can find what the asterisk points to.

    Notice that the image does say that state forms are free and filings are free. No qualifications, no limitation to fed filings, no asterisks.

    As far as Intuit's defense goes - that they complied with the fed free filing requirement - many legal requirements are floors. They represent the minimum that must be done, but don't protect you if you should have done more. I don't know the particulars of the free filing program that Intuit stopped participating in. It's just that when one sees this sort of "we complied with the law" argument in PR, it's often just spin.
  • About time. The free filing was very bogus.
  • edited April 5
    "Free" anything is likely bogus, with the possible exception of horse manure.
  • If something is truly free, there may be no commercial reason to promote it. And if it isn't really free, there's every reason (aside from a small matter of possible fraud) to promote it as such. Worth keeping in mind when investing in NTF funds.

    As to truly free programs:
    The I.R.S. Free File program offers no-cost online tax programs to people who earn $73,000 or less. The program began in 2003 as a way to offer do-it-yourself tax software to the public, through a pact between the I.R.S. and the Free File Alliance, a collection of commercial vendors.

    But the program was not widely used, in part because the I.R.S. lacked money to promote it. While 70 percent of filers were eligible to use it, just 2.4 percent did, according to a federal review. H&R Block dropped out of the federal program in 2020, and last year Intuit, which makes the popular TurboTax program, said it was leaving as well. In its regulatory filings, Intuit said it had left because the Free File agreement was changed in 2019 to “eliminate the pledge by the I.R.S.” that the agency wouldn’t offer a competing service.

    Still, eight software providers are participating this year, including TaxAct and TaxSlayer.
    NYTimes, Free Options for Filing Your Taxes, February 25, 2022

  • TurboTax maker will pay $141M in settlement over misleading ads for free tax-filing
    AP, via NPR
    California-based Intuit Inc. will suspend TurboTax's "free, free, free" ad campaign and pay restitution to nearly 4.4 million taxpayers ...

    Under the agreement, Intuit will provide restitution to consumers who started using the commercial TurboTax Free Edition for tax years 2016 through 2018 and were told that they had to pay to file even though they were eligible for the version of TurboTax offered as part of the IRS Free File program.

    Consumers are expected to receive a direct payment of approximately $30 for each year that they were deceived into paying for filing services, [NY State Attorney General] James said. They will automatically receive notices and checks by mail.
  • Not exactly on topic, but it just occurred to me that TurboTax has a Netflix-like problem in that one yearly license fee can be used for multiple returns. I do two daughters’ returns as well as my own. Have not run into a limit.
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