Intuit, the Maker of Turbotax, Has Successfully Lobbied to Stop The IRS From Creating an Easy Way for Millions of Taxpayers to File Online for Free.

Back in 2013, ProPublica reported that Intuit, the maker of TurboTax, had successfully lobbied to stop the IRS from creating an easy way for millions of taxpayers to file online for free (a service many other countries provide). Instead, the IRS struck a deal with Intuit and other for-profit tax preparation companies to offer their products for free to qualifying taxpayers, while the government pledged not to create its own competing system.

In 2019, as Intuit was lobbying Congress to make this agreement permanent, ProPublica exposed how TurboTax was using deceptive design and misleading tactics to steer low-income filers to paid versions of its service even though they were eligible to file for free. This shady behavior worked. Only a tiny percentage of eligible taxpayers actually used the free products offered through the deal with the government. Our investigation spurred public outcry, federal and state investigations, lawsuits and more. The IRS announced major reforms to its agreement with the tax prep software industry, more than 4 million people received refunds from Intuit as part of a $141 million settlement, and this year, the IRS is testing its own pilot program covering 12 states.

As for TurboTax and its advertising, you’ve probably seen less usage of the word “free” this year. In January, the Federal Trade Commission released a 93-page opinion excoriating Intuit for what it called years of widespread “deceptive” advertising for the company’s tax-filing software.

The FTC ordered the company to take specific actions to fix its ads. For its part, Intuit said it planned to appeal the order and stated that the company “has always been clear, fair, and transparent with its customers.”

In a statement, Sam Levine, the director of the FTC’s Bureau of Consumer Protection, said that the order was intended to send a message to all companies: “‘Free’ means free — not ‘free for a few’ or ‘free for some.’ Businesses can expect an FTC enforcement action if they harness the power of ‘free’ in the dishonest way Intuit did.”

This decadelong investigation (www.propublica.org/series/theturbotax-trap) shows how powerful and wide-reaching journalism can be when published in the public interest.