The Middletown Press (Middletown, CT)
State to get $1.2M in TurboTax settlement
Connecticut will receive $1.2 million as part of a nationwide settlement with Intuit, the company that operates the TurboTax tax-filing software, state Attorney General William Tong’s office announced Wednesday.
The payout is part of a national $141 million between Intuit and all 50 states, over allegations the company directed users eligible for a free version of the tax filing software to one that was marketed as free, but actually ended up charging a fee.
“TurboTax marketed their services as ‘free, free, free,’ but what they really meant was ‘fee, fee, fee.’ More than 40,000 Connecticut consumers were tricked into paying for these supposedly free tax services,” Tong said in a statement. “Our agreement forces TurboTax to pay back $141 million in restitution nationwide — including $1.2 million to Connecticut consumers.”
Tong said residents who are eligible for restitution don’t need to take action, and will receive a check in the mail for $29.64.
“Intuit is pleased to have reached a resolution with the state attorneys general that will ensure the company can return our focus to providing vital services to American taxpayers today and in the future,” said Kerry McLean, Intuit’s executive vice president and general counsel, in a statement. “Intuit is clear and fair with its customers, including with the nearly 100 million Americans who filed their taxes free of charge with our products over the last 8 years — more than all other tax prep software companies combined. In coming to a resolution on this matter, we admitted no wrongdoing and are pleased to be able to continue our strong partnership with governments to best serve the needs of taxpayers across the country.”
Tong’s office said the investigation into the company’s practices began after reporting by ProPublica revealed the company’s practices led consumers away from a free filing option, available on the IRS’ website, to a commercial version of its software.
“Intuit has offered two free versions of TurboTax. One was through its participation in the IRS Free File Program, a public-private partnership with the Internal Revenue Service (IRS), which allows taxpayers earning roughly $34,000 and members of the military to file their taxes for free,” Tong’s office said. “In exchange for participating in the program, the IRS agreed not to compete with Intuit and other tax-prep companies by providing its own electronic tax preparation and filing services to American taxpayers.”
But Tong’s office alleges the company heavily advertised a “freemium” version of their software called “TurboTax Free Edition,” which in practice was only free for a small number of users, about a third of U.S. taxpayers, Tong’s office said, compared to 70 percent who are eligible for the free file program.
Intuit withdrew from the free file program last year.
In addition to the settlement, Tong’s office said Intuit also agreed to change its business practices, including to how it markets free products, and a practice that required users to restart their tax filings if they exited a paid program to use a free product instead.