TurboTax calls foul at FTC’s order to stop ads for free services

The Federal Trade Commission and the makers of TurboTax are in a fight about what the word “free” means or whether something free really costs you nothing.

In a new ruling on Monday, the FTC said Intuit, the company that owns TurboTax, continues to mislead consumers with its “file free” claims “because most people don’t qualify for the $0 to file. The FTC says consumers don’t find out they don’t qualify for the free income tax software or filing until “well after they spent a lot of time putting all their info into the system. As a result, the FTC ordered Intuit to stop making false ‘free’ claims.”

The FTC said in 2022 that it also took action against Intuit for the same thing, claiming the ads were deceptive.

But Intuit says 37% of its users using Form 1040 with limited credit qualify for the “100% Free with expert help” offering.

What’s the free fight about?

Intuit spokesman Derrick Plummer told USA TODAY that the FTC’s decision and the 2022 federal court action – which Plummer said ultimately led to a ruling in Intuit’s favor – are flawed decisions. Intuit on Monday filed an appeal of the FTC’s latest decision with a federal court of appeals and said “we believe that when the matter ultimately returns to a neutral body we will prevail.”

Plummer also took aim at the FTC and its own internal judicial system: “Absolutely no one should be surprised that FTC Commissioners – employees of the FTC – ruled in favor of the FTC as they have done in every appeal for the last two decades. This decision is the result of a biased and broken system where the Commission serves as accuser, judge, jury, and then appellate judge all in the same case.”

In a blog post, Intuit also said: “There is no monetary penalty in the FTC’s order, and Intuit expects no significant impact to its business. Intuit has always been clear, fair and transparent with its customers and is committed to free tax preparations.”

In a statement after the Monday ruling, Samuel Levine, Director of the Federal Trade Commission’s Bureau of Consumer Protection said the commission’s “opinion finding that Intuit has engaged in a ‘broad, enduring, and willful’ deceptive advertising campaign is a major win for consumers and honest marketers.”

The Commisison’s review found “Intuit’s claims that TurboTax was a ‘free’ service were wholly unsupported, and that the vast majority of tax filers were not eligible for the ‘free’ version of the service.”

Levine said the order sets forth a clear standard that Intuit must stop its deceptive ads and tell the truth about how many are eligible for the “free” products.

“The order also sends a message across industry – ‘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.”

Here’s some free resources for your taxes

The FTC also provided tips on how to find free help with taxes:

⬤ If your adjusted gross income was $79,000 or less, the IRS Free File Program has free guided tax prep software for your federal taxes. Use this tool to find an IRS Free File trusted partner.

⬤ For servicemembers or veterans, MilTax is the Department of Defense’s free filing program. There, you can check eligibility, including for family members and survivors. Or start with the FAQs to learn more.

⬤ Volunteer Income Tax Assistance is an IRS program that helps people who make $64,000 or less, have a disability, or who don’t feel comfortable speaking English. Tax Counseling for the Elderly helps people 60 and older.

⬤ Keep an eye on this tax season’s IRS’s Free File Fillable Forms, available any day now, to check eligibility and get online versions of your federal tax forms, but no guidance.

Find your state tax agency to find out what help might be available for tax returns in your state.