TurboTax Tricked Taxpayers Into Paying for Its Free Tools, Lawsuit Says

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Fresh off of allegations that TurboTax lied to taxpayers about its free filing program, a new class action lawsuit against TurboTax maker Intuit claims the tax service breached its agreement with the Internal Revenue Service by intentionally obscuring its free filing service and charging qualifying taxpayers anyway.

The complaint was filed Sunday in a California district court on behalf of plaintiffs from three different states. TurboTax’s free filing service is offered—alongside programs from other tax companies—in partnership with the IRS and is meant to benefit 70 percent of U.S. taxpayers with adjusted gross incomes of $66,000 or less. In TurboTax’s case, the free filing service should be offered to those with adjusted gross incomes of $34,000 or less, per the IRS Free File Software page.


But according to the suit, TurboTax violated its agreement with the IRS by separating its free filing page from its primary service as well as by intentionally hiding the service from search engines—and therefore qualifying taxpayers—by altering its code, a discovery unearthed through ongoing investigations into TurboTax’s practices by ProPublica. Additionally, TurboTax is accused of using language meant to lead taxpayers to believe that its primary service is free only to later charge them.

“TurboTax also marketed its paid offerings as ‘Free Guaranteed’—so that qualified taxpayers believed they were filing their taxes pursuant to the free-filing program, only to be hit with unexpected charges after they already spent hours entering information and were getting ready to file,” the filing states. “As a result of this scheme, TurboTax breached its agreement with the government, took advantage of the U.S. public, and generated millions of dollars of ill-gotten gains from persons who least can afford it.”


The lawsuit follows multiple reports from ProPublica about the company’s alleged misconduct, including a report last week that claimed TurboTax lied to customers who sought refunds when they were charged for services that should have offered to them for free. In a recording of a customer service call obtained by ProPublica, a TurboTax representative appeared to mischaracterize its control of the service as well as reporting by ProPublica about the tax service’s actions:

When asked by Gizmodo on Monday about the allegation that TurboTax lied to customers seeking refunds, the company pointed us to a blog post published Friday in which TurboTax claimed it was “concerned by reports suggesting select call center agents recently may have provided inconsistent or inaccurate information to customers related to our Free File product.” Additionally, it said it was reviewing the situation and would proceed with the appropriate action.


Asked about the lawsuit, a spokesperson for TurboTax said in a statement by email that any claims that its maker “Intuit does not support the IRS Free File Program is flat wrong.”

“We are committed to offering Americans the ability to file their taxes for free, and we’re committed to the IRS Free File program,” the spokesperson added. “More IRS Free File returns have been filed using a TurboTax product than any other of the member companies—including approximately 1.2 million returns this tax season. We look forward to working with the IRS and private industry to improve the Free File program and help it continue to grow.”