💰TurboTax Free Filing? The FTC’s Not In To It
Tax Day may be officially behind us, but TurboTax isn't in the clear. Intuit, TurboTax's parent company, is facing a suit by the FTC saying that its ads for free filing are deceptive and amount to a scam. As The Hustle reports, the IRS agreed in 2002 to forego its own free tax filing program if for-profit tax services agreed to offer a free option to low- and middle-income people. However, in its March 2022 suit, the FTC alleges that Intuit lures users with advertisements for "Free" filing services, then forces upgrades that can cost $119 or more.
To begin with, TurboTax has cornered 73% of the market on tax preparation services, which means that its actions affect the broad majority of Americans filing taxes.
Last week, Senator Elizabeth Warren along with House Representatives Katie Porter and Brad Sherman sent a letter to Intuit's CEO alleging the company actively obscures its free filing service, changed its website to create confusion, and funneled users into paid services.
According to ProPublica, Intuit has a decades-long history of fighting IRS encroachment on its product. “Internal presentations lay out company tactics for fighting 'encroachment,' Intuit’s catchall term for any government initiative to make filing taxes easier — such as creating a free government filing system or pre-filling people’s returns with payroll or other data the IRS already has,” reads the report. However, in 2019, the IRS did change its agreement on free filing to allow for the creation of a government option but has yet to develop it.
The sheer size of TurboTax’s user pool could mean massive consequences for Intuit if found in violation of the law. However, forced arbitration clauses and other protections may mean a protracted, messy fight.