back to article FTC sues Intuit for false advertising, says 'free' TurboTax isn't always free

Intuit, makers of the tax-filing software TurboTax, deceives folks with false advertising and claims its product is free to use when it isn't always free, the US Federal Trade Commission claimed in a lawsuit filed Monday. “TurboTax is bombarding consumers with ads for ‘free’ tax filing services, and then hitting them with …

  1. YourNameHere

    So true

    I ran into this with my daughter. She had one more form and was required to pay to upgrade then pay to file last year. After spending 40 minutes entering the data and then getting to the point where your ready to file, it pops up, Oh, that one extra form is only available on the paid version and you will need to pay extra to file the state as well. I was not happy...

    1. ShadowSystems Silver badge

      Re: So true

      I can confirm that level of BS from Intuit.

      After creating an account & wasting the better part of a day trying to get my screen reader to make any sense of their site, entering in all my details, & trying to file for free, only to get slapped with the "you need to pay to file" bit, I killed the account & took my paperwork to a local tax office.

      It took the Human preparer all of *Ten. Fekkin. Minutes* to fill out the form, ask me to sign the form, & tell me that my refund should reach me in a few weeks. Total charge: zero. Why? Because the tax preparer was an actual member of the IRS & the free filing option is supposed to be *LAW*.

      I don't know what Intuit thinks they're trying to pull, but I hope the judge nails those fuckers to a wall.

      1. ecofeco Silver badge

        Re: So true

        This. All of this.

        Intuit needs its ass to them.

    2. Cliffwilliams44 Bronze badge

      Re: So true

      It is so, NOT True!

      The simple fact is people DO NOT READ THE TERMS BEFORE THEY START!

      Here is what I covered by the free edition

      W-2 income

      Limited interest and dividend income reported on a 1099-INT or 1099-DIV

      Claiming the standard deduction

      Earned Income Tax Credit (EIC)

      Child tax credits

      Student Loan Interest deduction

      If you have anything other than this it is not free!

    3. Anonymous Coward
      Anonymous Coward

      Re: So true

      I know someone who works at Intuit and has for about 20 years, and still does. The company's entire culture is one that is extremely predatory towards customers, as one would expect from a company that's basically MBA's on steroids. My "friend" fits right in.

    4. Version 1.0 Silver badge
      Unhappy

      Re: So true

      These days if it was "free" then Intuit would be selling all your data.

      1. badflorist

        Re: So true

        They sell your data anyways, this is why they wait to tell you it's _NOT_ free, which is because you've already agreed to the EULA and gave them your information. To be fair, they tell you up front in the EULA that they will sell your data (it's on page ~48/112 of the EULA... can't miss it :-/). Once upon a time you didn't have to have an "account" that steals your privacy away, all you needed was a valid payment method. However, that functionality is either now removed or I've lost the ability to find the method thus requiring an account for Intuit to steal your information.

        I've been using TurboTax for 18 years and I'm apparently too lazy to use anything else. That said, from what I've read the governments free tax service becomes more and more expansive every year.

    5. bombastic bob Silver badge
      Megaphone

      Re: So true

      Maybe what we REALLY need to blame is an OVERLY COMPLEX TAX SYSTEM.

      I like what Reagan managed to get done around 1986 - the one page form. And if it were ME designing the system, I'd have it down to a 3x5 card. Flat rate, no deductions (except for individals in your households), and if you report business income on your personal tax filing there would be a separate (but simple) form for all of that. But then you would not need to have an army of IRS agents, nor a cottage industry of tax software and accounting firms...

      (and politicians would lose MUCH of the control and power and influence that they wield)

      1. ecofeco Silver badge

        Re: So true

        If you cannot figure out basic income tax filings you should not be allowed outside without a guardian.

        The free filing being offered is THE LAW for personal income by persons making less than 73K per year and filing simple deductions. And it's actually pretty simple to figure out the deductions.

        If you need more than that and you are still trying use the free filing, you are either trying to commit fraud or willfully ignorant.

        https://www.irs.gov/newsroom/irs-free-file-can-make-tax-season-easier-on-people-filing-for-the-first-time

  2. Anonymous Coward
    Anonymous Coward

    Classic bait and switch

    but has the FTC finally grown teeth big enough to bite the hand that feeds congress? All attempts to reform this mess tend to die quietly on capitol hill with no meaningful action after the election year grandstanding.

    At the end of the day I wish them the best, but we should also be fighting for the state and federal governments to just actually tell us what they think we owe them us file our taxes directly and electronically. We don't need to support this racket of middlemen and their shady practices. Intuit can still sell people and autofile option for Quickbooks/Quicken users and keep their doors open. They neither deserve or are due to be subsidized by the government or the federal tax payer.

    1. vtcodger Silver badge

      Re: Classic bait and switch

      I vaguely think that it's a bit (maybe not a lot) more complex than Intuit being lying scumbags. My impression is that some simple returns actually should be/are free with the govenment(s) paying companies like Intuit a small fee to act as an online filing agent. Don't know for sure because my taxes are kind of complicated so I do them myself using a spreadsheet and paper forms

      Maybe someone around here knows more.

      1. TheBruce

        Re: Classic bait and switch

        I filed last year and it was free. I started this year (for 2021 tax year) and at the end I can't file for free. No option. I even went to file free and get a but we checked if you needed to file a form (which I didn't) so now we have to charge you BS.

        Went to IRS website and found several programs. Found one that I could use to file electronically my Fed and State returns at no cost.

      2. ecofeco Silver badge

        Re: Classic bait and switch

        Yeah, no. It's outright fraud by Intuit.

        I've come across several on-line free filing places over the years that pulled this crap. Some years I've had to file three times because the first two were fraudulent companies who did this, so I cancelled and went to the next one.

  3. FrankAlphaXII
    Happy

    About time

    I'm in one of the class actions against them over this very same thing, and they're being incredibly difficult, I had to basically give a deposition to their legal counsel stating the same thing over and over, that there was no way to actually file the 1040 for free, especially if you filed Earned Income Credit paperwork too, and just about everyone working who has a child in the United States is filing for that credit. Glad the FTCs suing them too. They deserve it completely.

  4. DS999 Silver badge
    Mushroom

    The real problem

    Is that the tax prep industry has successfully lobbied congress for decades to keep a law on the books banning the IRS from sending out prefilled returns. If they did that, well over half the country could simply sign the return and mail it in (or do it electronically)

    That would kill Intuit, H&R Block and other mass market tax prep companies who make most of their money doing returns for people who have a super simple return that is composed entirely of information the IRS already has - stuff reported on W2, 1098, 1099, etc. received in the mail, and who take the standard deduction for themselves and their dependents. These companies advertise "free" returns but there are so many gotchas about income levels and forms that a lot of people get fooled and end up having to pay, but once they've started doing their taxes with the software (or taken them in to H&R Block) they figure it is too much of a hassle to start over so they just pay.

    I won't deal with those crooks. I have an accountant do my taxes since they are pretty complex, but I do my mom's taxes myself using the PDF fill in forms on the IRS site. Started doing that a year before my dad died, before he got sick he had always done them by hand on the paper forms!

    Sure, it would be quicker using tax prep software, but they will charge for it because her income is too high, and she needs a couple additional forms due to capital gains, dividends, not taking the standard deduction, and charitable contributions. Just did her state taxes last Friday, probably was 3-4 hours between state and federal (would have been 3 on the nose but her printer didn't want to cooperate) That's a small price to pay to not give those bastards my mom's money!

    1. joed

      Re: The real problem

      Absolutely the crux of the problem. These scammers corruptedlobbied Congress to block possibility of direct electronic filing for US citizens. In effect everyone ends up paying to them either for "value added" service (fine if this was true choice), with personal financial data (if one qualified for the "free" filing) or with personal time (if one refused to deal with the middleman scumbags). And while my state does offer electronic filing for state taxes I've been forced to medieval ways for federal tax. True undisturbed "free market" solution they argued for.

      1. ecofeco Silver badge

        Re: The real problem

        Free market cheerleaders never actually want a free market. They want to be free to fuck you up the ass without consequences.

        Now let me tell you how I REALLY feel about those lying, thieving scumbags...

  5. localzuk Silver badge

    Bizarre system

    To a Brit, the US tax system is bizarre. The last time I filed a tax return? Never. Its automatic for "normal" employees (as most people don't claim anything back). For everyone else, you can file on the government site, and don't need to pay for some special software to do it. Of course, you can pay accountants or buy software if you want, but the free, normal, way of doing it is available to all.

    How on Earth is there not just a simple government portal for that?

    1. DevOpsTimothyC Bronze badge

      Re: Bizarre system

      From what I understand US taxes (for the average person) are closer to to what a small limited company would do in the UK.

    2. adam 40 Silver badge
      Paris Hilton

      Re: Bizarre system

      Wait for "Making tax digital" to come to personal returns though.

      Then there will be a package you must use to file the return, instead of doing it through an online form.

      I have been looking at this for small businesses, and I believe the way forward will be an Open Source library that can talk to HMRC servers and do the filing, that will at least get computer/tecchy contractors out of this type of shenanigans.

      Who's with me???

      <Paris because she's inspecting my "return">

    3. Michael Strorm

      Re: Bizarre system

      "How on Earth is there not just a simple government portal for that?"

      Because the US is even further down the road of regulatory capture than the UK is, and companies like Intuit who profit from the system being complex lobby to keep it that way.

      At the risk of stating the obvious, the US is run for the benefit of corporations, not the people who can be lied to at election time or ignored, since there are only two meaningful choices, both in the pockets of big business (*) and most people can be held to ransom on the basis that they won't risk the "bad" (i.e. other) one getting in.

      (*) Regardless of what risible, foaming-at-the-mouth right wing Americans think about "leftist" Democrats. If those gun-shaggers want to bleat about being forced to live under an Obama/Biden/Democrat government as "communist", I'd *love* to see them forced to live under a "real" communist system like North Korea to see if they still couldn't tell the difference.

      1. LDS Silver badge

        Re: Bizarre system

        small government = Big Profits.

        Just like drugs prices - most States do deals to buy at lower prices, US is barred from dealing prices with those poor pharma companies.

    4. nagyeger

      Re: Bizarre system

      The dumbest bit of HMRC's system is that if you're foreign-resident you can't use the online system, but need to send in paper forms.

      I guess they really want those fingerprints??

    5. quxinot

      Re: Bizarre system

      Did you seriously just use the words "simple" and "government" together in the same breath while discussing taxes?

      Put the can of paint down, you're not that thirsty.

      1. Man inna barrel Bronze badge

        Re: Bizarre system

        All tax systems become more complex over time. I recall an accountant I used for auditing, who was a bit of a Luddite when it came to computers. All the calculations were done on hand-cranked adding machines. When he did finally get everything computerised, he noted that the promised reduction in human toil did not materialise, and in fact he was working harder than ever. The tax rules had got more complex, which wiped out any advantage that automation offered.

        Another cause of the ever more complex tax system is the arms race between tax collectors, and rich people and corporations, who employ every (legal) trick in the book to reduce the amount of tax they pay. The tax authorities are continually plugging holes in the system that the avoiders exploit, and this inevitably means more rules.

        There is also the point that governments like to use tax rates to encourage what they consider to be good things, and discourage bad things. This obviously complicates tax rules. There are good things that you can claim against tax, but to claim your refund, your expenditure has to go on the tax form. My current employer told me that, because I am a brainy chap who invents things, they can claim some of my salary against corporation tax.

    6. Man inna barrel Bronze badge

      Re: Bizarre system

      As a director of a small limited company for a number of years, I was obliged to fill in a self-assessment tax form. Though my actual income was pretty simple to describe, the forms had to cover so many special cases that it could be quite a slog. The online system was not much better. One time, I went overdue because I thought I had submitted the online form, but all I had done was agree that the details I had submitted were correct. If I recall, I got away with that, because HMRC could see that I had actually entered the data before the due date. Nice of them.

      Actual company accounts had to be audited, so we needed to employ an accountant. I was not very good at record keeping and paperwork, so this could be involve a bit of faffing about.

      Now I am a full time employee, I don't have any need to fill in tax forms, because HMRC have all the data they need from my employer, and various investments, where tax is automatically deducted.

  6. Noodle

    About damn time, Inuit has been getting away with this rort for years.

  7. Joe Drunk

    US 1040 forms not as complicated as they are made out to be

    If you can do addition/subtraction, calculate percentages and have the ability to lookup numbers on a chart you then have all the skills needed to fill out a US 1040. I used to fill out my own and still help friends and family fill theirs out even joint returns. Anything more complicated (investment income, 1099 etc.) I refer them to a paid tax preparer. I don't fill out my own anymore life got too complicated requiring an accountant to do it quarterly.

    A basic 1040 is just that - basic. Single/no dependants? US 1040EZ (single page).

    The forms are all downloadable PDF fillable forms from IRS website with detailed instructions and criteria for each.

    1. Timo

      Re: US 1040 forms not as complicated as they are made out to be

      Just discovered last night that the 1040EZ form was discontinued in 2018. And the 1040 "long form" is now not as lengthy as I remember.

      Been paying an accountant for the last couple years, but likely to go back to doing it myself next year. The standard deduction eliminates a lot of paperwork and supplemental sheet calculations.

  8. Winkypop Silver badge
    WTF?

    It’s government tax

    The government should provide free software services.

    People can use a commercial product if they prefer.

    1. Kimo

      Re: It’s government tax

      There is a FreeFile option from the IRS, but it takes some digging to find. If your gross income is over $68K that's the only free electronic option (unless you are a senior).

      1. ecofeco Silver badge

        Re: It’s government tax

        https://www.irs.gov/newsroom/irs-free-file-can-make-tax-season-easier-on-people-filing-for-the-first-time

        Now 73K income limit.

    2. OldSod

      Re: It’s government tax

      The US IRS "Free file" program leverages the existing tax prep software companies to produce a citizen-facing friendly software product that the average person can use to complete their tax return and (ideally from the IRS point of view) file it electronically rather than on paper. This is a very desirable outcome on the part of the IRS.

      Producing the tax prep software is not a trivial task, as the US tax code (and the IRS rules to implement/enforce it) are complicated and subject to change right up until the end of the tax year. Getting a government agency to produce a reasonable friendly software product that meets all of the government internal requirements (ADA compliance, anyone?) in that time frame is virtually impossible.

      The tax software companies stand to make more money if they can get the citizen to pay for the tax prep software, however. They are incentivized to convince the citizen that they need the "for pay" version, and in some cases well-known companies have gone to extreme lengths to obfuscate the truly free tax prep software that they agreed to make available to citizens as part of their business arrangements with the US government.

  9. thejoelr

    Couldn't happen to a nicer company.

    Remember the stories about MailChimp after Intuit acquired them? Years ago they bought another company I dealt with and trashed the product. Intuit has always been shady and misleading. I remember an article that they hid their required free filing site at one point so that you basically had to know the URL to get to it. The IRS site listed alternatives, and I used TaxAct for a few years (not an endorsement) with a much better experience while still being a quite competent product. They are not the only game in town. I use an accountant now that things are slightly complex, and I generally recommend them for year round use. They are useful for financial planning advice if you get one you trust.

    Oh, logmein also falls into the category of companies I refuse to do business now due to their shady practices.

  10. Meeker Morgan

    I pay for Turbo Tax

    My finances are just a little too complex for the free option, but not so complex as to need to hire a human.

    And the terms really are laid out clearly. Just really read the terms of service. Really.

    1. bombastic bob Silver badge
      Meh

      Re: I pay for Turbo Tax

      agreed, with the K1 forms and other stuff associated with having income come through a corporation, it's usually the cheaper option just to use their software and pay the e-file fees. An accountant costs more and you're essentially buying the amount of time you would be spending,. and costs of mailing stuff the old way.

      (it's how they stayed in business by providing such a service at low cost)

  11. Rich 2

    Changing T’s and C’s ????

    Rather than forcing Intuit to change their advertising and stop saying the product is free, they should be made to make the product genuinely free.

    That would (a) mean that the people stuck in this situation will be sorted and (b) it would piss off intuit enough for them to (maybe?) change their business practices in the future (and even they didn’t, they would still be pissed off)

  12. YetAnotherXyzzy

    Could be worse

    I'm a U.S. citizen (therefore subject to tax on worldwide income) resident in another country, which does not have a tax treaty with the U.S., so I have the joy of being subject to two different tax regimes. While I agree with multiple commenters that the U.S. system is needlessly complicated, I am sorry to report that it could be worse. How about being prohibited from filing your own taxes and forced to use tax "professionals" whose primary qualification is having the political connections needed to get into the monopoly racket? How about "auditors" who openly tell you how much cash will make them go away?

    Mind you, I choose to live here despite the tax nonsense and have no regrets, so I hope the above comes across as intended ("hey, it could be worse") and not as the whinings of an entitled First Worlder.

    Not identifying my country of residence because I'm not interested in spitting in the faces of my hosts. They know what problems they have and they suffer worse than I do. They don't need some know-it-all foreigner to call them out.

  13. My other car WAS an IAV Stryker Silver badge

    Intuit is not the only one -- TaxAct also

    I switched many years ago from TurboTax online to TaxAct [1] based on cheaper pricing for the non-free tiers, especially regarding the state filing. But they do the same things as Intuit / TurboTax:

    - Hard to know from the start what qualifies as free

    - State filing is never free

    - Save/print those PDFs or pay to access them after a certain time

    - Pushed certain forms up the ladder into higher and higher tiers. A gig worker with 1099-NEC (non-employee compensation) who has to do a Schedule C and self-employment tax (schedule SE?) is going to take a BIG hit.

    A few years back I saw the tide and jumped ship to a truly "free" [2] service [3]. Not as user-friendly, but since I know what I'm doing I can access everything I need. This is especially nice since this year I owe my state and paying for the privilege would stink.

    1. NOT an endorsement, but the service was decent.

    2. I know, my info is being sold. But the companies in question (in recently changed hands) offer other free services so my info was already shared.

    3. And because of #2, I'm not telling unless you ask, but I don't care how nicely you ask, it's your info/data at stake.

  14. DrXym Silver badge

    Gotta love the US

    Sane country - let's get the employer to do the tax on behalf of the employees. That way tax is done by trained professionals, deducted at source and there is less effort for the majority of people in this boat. Obviously there will be self employed and other outliers but they are a minority.

    USA - let's make everyone complete a tax return. We'll be swamped in erroneous/fraudulent declarations so we'll need to hire massive human & computer resources to bring it under control. And because it is so complex and stressful we'll create a market for accountants and accountancy software promising to simplify a process that few needed to be subjected to in the first place. But some of that software will be ransomware, but hey by this point you're so desperate to get things over with you probably don't care right?

    1. OldSod

      Re: Gotta love the US

      Several conflated factors lead to the US tax reporting mess from what I have seen:

      1. The tax code, as dictated to the IRS by the US Congress, is anything but simple. All kinds of political grandstanding from incentivizing people to jump on various "green" initiatives to encouraging college, medical, and retirement savings and spending to operating sideline federal welfare spending programs gets wrapped up in the guise of the "income tax" collection process.

      2. The US tax system is a "voluntary tax program" (in the sense that it requires voluntary thinking and movement, not that you can volunteer [or not] to actually pay taxes). Although more and more types of data on citizens financial activity is reported directly to the IRS each year by various institutions, there is no single repository of all information, not even within the IRS. Citizens are required to understand, interpret, and apply tax laws to their own circumstances and self-report their interpretation of their financial obligation to the government. For some, with only a single employer, no investments, limited banking, and other simplicities, the government does have all of the data on-hand and has, at least in the past, offered some EZ file options. Many people have complications, though. I haven't been able to file my taxes easily without software or paying a preparer for fifteen or twenty years. Regardless, the IRS takes what the citizen self-reports and then determines whether it all hangs together, both what they already knew as well as what the citizen adds in their report. This process is more reactive than proactive, and how well it works depends on how much the Congress decides to fund the audit activity. This waxes and wanes due to political whimsy.

      3. Some years ago I was involved in a large-scale effort on the part of the IRS to "modernize". This was right around when doing business on the web was becoming standard, but not yet the default way everyone was operating. The project requirements specified that it would provide a web-based way for citizens to interact with the IRS for many things, including filing taxes. You can imagine my surprise, then, when after months of effort defining requirements, doing analyses, and starting design work, I ended up in a room with some IRS folks who apparently didn't get the same memo as the ones pushing the project. They insisted that the IRS IT systems holding "corporate data" were forever and always barred from being connected in any way, even indirectly, to the Internet. Because security, of course. So direct service to taxpayers was out. But the IRS could let those systems connect with trusted "third party tax service providers". Thus the paradigm of submitting taxes completed using third-party tax software, submitted to that tax software vendor's corporate systems, and then and only then that information being sent along a trusted pathway to the IRS systems holding "corporate data".

      It is definitely in the IRS' best interests to have tax preparation simple, relatively easy, and all electronic. There are lots of good folks there who want that to be the case. However, the US Congress needs to be convinced to manage the US tax code in a manner that permits that to happen, both in terms of its complexity and in terms of how often (and late in the yearly cycle) they make changes to it. And the "security" folks at the IRS need to (if they haven't already) put on their grown-up pants and face the reality that they can't hide behind outdated security rules forever.

      1. DrXym Silver badge

        Re: Gotta love the US

        I think the easiest solution out of this mess would be to start shifting the burden of tax declaration for wages onto the employer, with opt-outs for employees who don't want it.

        Even if all the employer does in the first instance is hand out a printed slip of paper with a QR code on it serving as a tax document that can be used online. Over time that could be the foundation to deduct income at source too. Then the IRS could provide a simple web interface for people to fill online applications for other common deductions or taxes - medical, utility, disability, welfare etc.

        Personally I just think it's insane how backwards US taxation is. I realise they have federal & state taxes and other complexities but even so. Got to start somewhere.

  15. bpfh
    Mushroom

    Meanwhile in France...

    Some sense broke out, and the tax return has over the last 15 years gone from a multi page behemoth to a single sheeter to a fully online reporting where you go through a 7 page wizard , where you can glance through your return, confirm your address and bank account, review your salaries, add stuff they have missed if any and validate. Doing my annual tax return takes me... 2 minutes from login to complete (some declarations take longer if you have strange investments that require extra calculation, but the tax office site takes you through that too, automatically. And this is in the country that INVENTED the word "bureaucracy".

    So, I'm amazed that can the tax service of the most powerful country on the planet have such a screwed up system is beyond me when even the French can get it right...

    1. Jean Le PHARMACIEN

      Re: Meanwhile in France...

      Did my first (French) one laat year..on paper. Not so bad considering it was all In French (duh)

      This year is *required* online (initial one is paper) and from what I read is easier...(ask me at end of May when filing has to be finished)

      We have two UK Gov pensions with tax deducted at source (French 'tax' you then 'credit' the tax due as 'paid') so its not as simple as first seens. P60 copy is your friend (to non UK = Gov issued summary of income+ tax paid in prev financial year)

  16. Borg.King

    Swings and roundabouts

    Last time I paid a tax preparer to file my taxes cost me $350 about 3 years ago, and he missed a huge double income entry that would have cost me $50k in extra tax if I hadn't spotted it.

    TurboTax cost me ~$150 this year, but I have about 10 more forms beyond the 1040, so I'm not unduly disturbed by that fee.

    U.S. Tax needs to be overhauled. All the statements you get (W2, 1099's etc.) need just two boxes

    1: Income,

    2: Deductions/Already paid.

    Enter all the box 1's and 2's into a website, or an app, it does the straightforward math (verifiable by a nice simple step by step help document), and send a check, or get a refund. It doesn't matter what the amounts are for.

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