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Investigating Intuit’s definition of “free” tax services

| Sep 22, 2020 | Commercial Litigation

Intuit, a high-profile name in the tax software industry, seems to be under their own “audit” regarding offers for free filing that led to their customers paying for services. Known for QuickBooks account products, TurboTax has become their prominent profit maker, if not a pioneer in getting taxpayers to forsake paper filings for online options.

By 2019, they boasted 40 million taxpayers using TurboTax, representing a 40 percent market share.

Dirty tricks of the trade?

The Federal Trade Commission (FTC) is investigating whether Intuit violated the law against unfair and deceptive practices. Specific allegations surround misdirecting customers eligible for free filings to paid products.

ProPublica first sounded the alarm regarding the “strategies” Intuit employed to guide tax filers towards paid services and away from free filings. Free File was a compromise created to effectively stop the IRS from providing their own free filing services. Intuit had launched intense lobbying efforts to stop the launch and, in conjunction with its competitors, promised to offer the no-cost option for lower-income taxpayers.

Without the agreement, the IRS could have used their resources as a well-known government agency to dominate the market. Tax preparation companies would see their market share significantly decline.

According to ProPublica, Intuit’s “gratitude” was short-lived. They purportedly used code in the Free File landing page to hide the free option from search engines. The company also used the design on their site to coerce customers to pay, playing on the all-too-common misconceptions and doubts that come with filing taxes.

For many taxpayers who struggle to make ends meet, TurboTax’s so-called “free services” actually cost many of them more than $200.

The investigation is ongoing.