May 13, 2019 – Two More Proposed Class Actions Filed Over Intuit’s Alleged Concealment of TurboTax’s Free ‘E-File’ Feature
On May 13, 2019, Intuit Inc., was hit with two more proposed class action lawsuits centered on allegations that it deliberately hid its service that allows qualified consumers to electronically file their taxes with the IRS for free. Filed in California’s Northern District, both lawsuits echo the claims detailed on this page, alleging that Intuit, among other tactics, altered the code on the TurboTax website to hide the free e-file service from search engines, as well as sprung costly upgrades on users despite confusingly positioning the software as free.
A proposed class action lawsuit out of California alleges TurboTax intentionally and deceptively hid from taxpayers its government-mandated free filing service.
“As a result of this scheme,” the complaint reads, “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 27-page lawsuit against Intuit Inc. states that more than 35 million consumers use its flagship TurboTax software each year to file their income taxes with the IRS. Many use TurboTax in the first place because in addition to its step-by-step guidance, the software affords the ability to electronically file tax returns, the case notes. Thanks to an extended agreement between the IRS, TurboTax and 11 other tax preparation companies, who the suit points out have spent millions lobbying against the IRS creating its own free-file system, a cumulative 70 percent of taxpayers—roughly 100 million citizens whose adjusted gross income is $66,000 or less—have the option to file their taxes for free.
As the case tells it however, “less than 2.5% of eligible taxpayers” actually end up filing their taxes for free, a discrepancy the lawsuit attributes to Intuit’s “array of deceptive practices” aimed to prevent lower-income taxpayers from filing for free.
TurboTax, the case alleges, violated its agreement with the federal government by “intentionally diverting qualified taxpayers” away from its free filing program and toward its paid product offerings. The defendant accomplished this, the suit says, citing an extensivePro Publicareport, bysegregating its “free file” webpagefrom its primary website. Further, Intuit allegedly altered the source code on TurboTax.com in order to hide the free filing section from search engines and to make the page not as easily accessible. In fact, the free filing version of TurboTax’s software—the “Freedom Edition”—is not available through the company’s primary website, the case says.
TurboTax went so far as to market its paid offerings as “Free Guaranteed,” the case continues, which led qualified taxpayers to believe they were filing with the IRS for free only to be surprised with charges after they’d already spent hours entering their tax information.
The lawsuit looks to represent a proposed nationwide class, as well as New York- and Pennsylvania-only classes, of consumers who qualified to file their taxes for free pursuant to the IRS Free-Filing Program for the 2018 tax season and satisfied TurboTax’s eligibility requirements but were charged money by TurboTax to file their tax returns.