Some consumers who used Intuit’s TurboTax could get up to $85 each as part of a 50-state settlement over the software maker’s tactics that allegedly tricked consumers into paying for tax services that should have been free.
Under the settlement, Intuit must suspend its “free, free, free” ad campaign that promised free tax prep, but actually charged many consumers for the service, according to a Thursday statement by New York Attorney General Letitia James.
The $141 million settlement, which also includes residents in Washington, D.C., stems from a 2019 ProPublica report that found Intuit relied on deceptive tactics to steer low-income tax filers away from federally supported free services for which they qualified and into a product that charged a fee to file tax returns.
“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,” James said in the Thursday statement.
In an emailed statement to CBS MoneyWatch, Intuit said, “Intuit is pleased to have reached a resolution with the state attorneys general that will ensure the company can return our focus to providing vital services to American taxpayers today and in the future.”
Here’s what to know about the settlement.
Who is eligible for the TurboTax settlement money?
About 4.4 million consumers across the U.S. are eligible for the payment, according to the statement.
People who qualify to receive a payment are TurboTax customers who used the product in the 2016, 2017 or 2018 tax years and were also eligible to use an Intuit IRS Free File Product.
Eligible customers also must have begun their tax returns using a TurboTax Free Edition Product but then have been informed that they were ineligible to use that product, and thus paid for a TurboTax product. Consumers must also have not used the IRS Free File Product in a previous tax year.
For the 2016 tax year, IRS Free File was available for taxpayers who made $64,000 or less.
How to get your TurboTax settlement check
You don’t need to do anything, according to the settlement website.
If you are eligible, you should receive an email from the settlement fund administrator that informs you of the approximate amount of your payment.
Payments will be mailed throughout May, the site says.
How much will the TurboTax settlement check be?
The payment is based on the number of years a consumer used the TurboTax product and whether they qualify.
Most consumers will receive between $29 and $30, the site says, although some individuals who filed for all three of the years covered by the settlement could get about $85, the New York attorney general said.
Why did the TurboTax settlement happen?
A multi-state investigation found that Intuit used “several deceptive and unfair trade practices that limited consumers’ participation in the IRS Free File Program,” according to the New York AG’s statement.
For instance, Intuit used similar names for its commercial “freemium” product and the IRS Free File service, and it also blocked its IRS Free File landing page from search engine results in the 2019 tax filing season, the investigation found. That effectively shut out people who were eligible for the free file program from using the service, the statement said.
Free File, a partnership between the IRS and commercial tax-preparation companies, should allow about 70% of U.S. taxpayers to file their tax returns for free, but less than 3% of taxpayers used Free File in the 2020 tax year, IRS figures show.
Intuit stopped participating in the IRS Free File program in July 2021.