Intuit pulled out of the official IRS Free File initiative last year, though the company continues to allow some customers to file taxes for free. To do this, it allegedly changed the name of its filing services multiple times (including calling the commercial version “Free Edition”), hid its IRS Free File webpage from search engines, and made specifics about pricing and eligibility hard to find. TurboTax was accused of funneling people seeking the the IRS Free File offer to its own “freemium” product, which was widely advertised as free but actually charged fees to many customers. The agreement comes after New York and other states investigated TurboTax for encouraging customers to use paid tax prep options when they could have filed at no charge through the IRS Free File, a partnership between the government and several name-brand softwares to help Americans below certain income levels do their annual taxes. “Today, every state in the nation is holding Intuit accountable for scamming millions of taxpayers, and we’re putting millions of dollars back into the pockets of impacted Americans.”
“Intuit cheated millions of low-income Americans out of free tax filing services they were entitled to,” James said in the release. Those customers will receive $30 for each year they qualified for the federal IRS Free File program but ended up paying to file taxes due to TurboTax’s confusing system. New York Attorney General Letitia James announced a legal settlement Wednesday in which Intuit, the company that owns popular tax preparer TurboTax, agreed to provide $141 million in restitution to customers it “unfairly charged,” according to a news release.
Some 4.4 million Americans who got duped into paying to file taxes through TurboTax when they could have filed for free are officially getting their money back.