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In a statement on the settlement, Intuit said it "agreed to pay $141 million to put this matter behind it." The $141 million in restitution includes about $2.5 million for administrative fund costs.
Turbotax free file for free#
Specifically, "Intuit will provide restitution to nearly 4.4 million consumers who started using TurboTax's Free Edition for tax years 2016 through 2018 and were told that they had to pay to file even though they were eligible to file for free using the IRS Free File program offered through TurboTax." Payments will be about $30 for each tax year and "impacted consumers will automatically receive notices and a check by mail," the announcement said. Today, every state in the nation is holding Intuit accountable for scamming millions of taxpayers, and we're putting millions of dollars back into the pockets of impacted Americans." "For years, Intuit misled the most vulnerable among us to make a profit. "Intuit cheated millions of low-income Americans out of free tax filing services they were entitled to," James said in the settlement announcement. Intuit agreed to the settlement with all 50 US states and the District of Columbia. Intuit is accused of steering customers away from the IRS Free File program that is free to 70 percent of taxpayers while using misleading ads to promote a separate "freemium" TurboTax product that isn't actually free to most people. In the meanwhile, Intuit is currently facing investigations over its practices leading people to pay for what is legally a free service.TurboTax owner Intuit "will pay $141 million in restitution to millions of consumers across the nation who were unfairly charged" and stop its "free, free, free" ad campaign "that lured customers with promises of free tax preparation services, only to deceive them into paying," New York Attorney General Letitia James announced Wednesday.
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But the IRS isn’t addressing those sorts of tricks with its new restrictions, so it’s quite possible Intuit and other tax prep companies will have plenty of other ways to make their money. And TurboTax had also deliberately targeted students and low-income users with the paid version of their service, moving necessary forms like student loan interest deduction into the “Deluxe” tier. Some of the links in the free version of TurboTax would link to the paid version, tricking you into paying more than you should. You couldn’t access the free version from at all. When ProPublica published their groundbreaking report in April, they found that TurboTax’s main page didn’t even link to the page that lets you file for free. The new addendum also requires all these tax preparation companies to give their truly free options a specific badge: “IRS Free File program delivered by ,” so you can tell them apart from other versions which might sneakily require you to pay. In return, the IRS agreed to not make its own free filing software, something that the tax preparation companies thought could be a big competitor to their business.
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The Free File program initially said that filing software had to allow lower- and middle-income taxpayers to be able to file for free. Tax industry lobbying was how the IRS’s Free File was initially created, with the IRS agreeing to leave it up to those companies. But in the United States, Intuit has spent millions each year lobbying against these simpler systems which would eliminate the need for their services. The government uses data it already has on your income to fill out your taxes.
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In several other countries, filing your taxes is a lot easier. They’ve also eliminated a restriction against the IRS making its own filing software. On Monday, the IRS released an addendum to its Free File program - the agreement with tax preparation companies intended to keep tax filing free - that now prohibits these companies from hiding the pages that allow you to file for free from Google and other search engines. Now, ProPublica reports that the IRS is taking steps against this. This made it harder for users to find the free versions online, and many people ended up paying to file their taxes when they really didn’t have to. They, along with H&R Block, went so far as to keep the free versions from showing up in search engine results. Earlier this year, ProPublica published a report showing how Intuit, the company behind TurboTax, was misleading users into paying to file their taxes - something that’s supposed to be free in the first place for many.