State secures settlement for TurboTax users who paid for free version
The state Office of Consumer Protection has joined the 49 other states in a $141 million restitution settlement with Intuit, the owner of TurboTax.
Hawaiʻi will take a $450,000 share of the settlement for more than 14,000 local consumers. Those who paid to use TurboTax’s Free Edition when they didn’t have to from 2016 to 2018 can expect a direct payment of $30 for each year they filed.
“This settlement holds TurboTax accountable for engaging in alleged unfair and deceptive trade practices in marketing its tax services,” Stephen Levins, executive director of the Office of Consumer Protection, said in a statement.
The company previously offered two free editions.
The IRS Free File program was a public-private partnership with the Internal Revenue Service. Those earning under $34,000 and military families could use the product.
TurboTax Free Edition was another commercial product that was only free for taxpayers with simple returns — which was defined by the company. Only one-third of U.S. taxpayers could use the product for free.
The multistate investigation found that Intuit used confusingly similar names for its free products, and deployed deceptive advertising.
The settlement will be paid out to consumers who were eligible for the IRS Free File program but were duped and charged to use the Turbo Tax Free Edition.
Intuit has also agreed to reform its business practices, including:
- Refraining from making misrepresentations in connection with promoting or offering any online tax preparation products;
- Enhancing disclosures in its advertising and marketing of free products;
- Designing its products to better inform users whether they will be eligible to file their taxes for free; and
- Refraining from requiring consumers to start their tax filing over if they exit one of Intuit’s paid products to use a free product instead.
Intuit withdrew from the IRS Free File program in July 2021.