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The FTC says Intuit’s TurboTax free tax filing claim is deceptive

TurboTax markets free tax filing, but not everyone qualifies.

Tax forms.

The FTC complaint is the latest twist in a series of legal battles over allegations that Intuit makes misleading claims about TurboTax.

Photo: Kelly Sikkema via Unsplash

The Federal Trade Commission accused Intuit of deceiving customers with misleading claims about free tax preparation services through TurboTax.

The agency asked the U.S. District Court for the Northern District of California to order Intuit to stop “disseminating the deceptive claim that consumers can file their taxes for free using TurboTax when in truth” many consumers end up being charged a fee for the service.

While the service is free for some users, Intuit tells many customers “after they have invested time and effort gathering and inputting into TurboTax their sensitive personal and financial information to prepare their tax returns, that they cannot continue for free; they will need to upgrade to a paid TurboTax service," the complaint said.

Intuit has denied the FTC’s claims. “The FTC’s arguments are simply not credible,” Kerry McLean, executive vice president and general counsel of Intuit, said in a statement. “Far from steering taxpayers away from free tax preparation offerings, our free advertising campaigns have led to more Americans filing their taxes for free than ever before and have been central to raising awareness of free tax prep.”

In 2002, the IRS struck an agreement with an industry group, the Free File Alliance, under which the IRS promised not to provide free tax filing services directly to citizens if the industry met goals around having a certain number of returns filed electronically for free. Intuit participated in the alliance for years before announcing it would leave the group last year. The IRS still doesn't offer electronic filing directly.

The FTC complaint is the latest twist in a series of legal battles over allegations that Intuit makes misleading claims about TurboTax. Intuit settled a class action lawsuit but the settlement was rejected by a federal judge in San Francisco.

Intuit has been hit with tens of thousands of customer arbitration claims, according to a recent ProPublica report. The campaign is bankrolled by a Chicago law firm which is using the legal tactic against the company’s argument that customers had agreed to use private arbitration to settle legal complaints, the report said.

Benjamin Pimentel

Benjamin Pimentel ( @benpimentel) covers crypto and fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Google Voice at (925) 307-9342.

irsintuitturbotaxfree file alliancetaxes
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