ALBANY – TurboTax owner Intuit has settled a $141 million lawsuit claiming the company knowingly misled millions of low-income Americans into paying for tax services that should have been free under federal law.
The lawsuit claims during 2016 to 2018 Intuit knowingly misled and charged customers for use of their program when they should have been eligible to file free returns through the federal Free File program. The program was launched in 2003 and allows filers with an income under a certain threshold to file their returns for free. For example, according to the Internal Revenue Service’s website, “taxpayers who made $73,000 or less in 2022 will likely find an offer from a Free File provider that matches their needs.” TurboTax is one of those providers.
New York State Attorney General Letitia James announced the multi-state agreement Thursday. As part of the settlement, New York State will receive $5.4 million total for more than 170,000 New Yorkers. The Democrat’s office said most consumers are expected to receive between $29 and $30. Eligible consumers include those who paid to file their federal tax returns using TurboTax during 2016 through 2018 who were eligible for the federal Free File program. Individuals who filed for three consecutive years will receive up to $85.
“TurboTax’s predatory and deceptive marketing cheated millions of low-income Americans who were trying to fulfill their legal duties to file their taxes,” James said in a statement. “Today we are righting that wrong and putting money back into the pockets of hardworking taxpayers who should have never paid to file their taxes.”
Intuit admitted no wrongdoing in the settlement.
“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,” Kerry McLean, Intuit’s executive vice president and general counsel, said in a statement. “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.”
Consumers impacted by the settlement will be notified by email by the settlement administrator, Rust Consulting. Those consumers will receive a check in the mail automatically, without filing a claim.