back to article TurboTax to pay $141m to settle claims it scammed millions of people

Intuit will cough up $141 million in settlement costs and has promised to not make any misleading claims about its supposedly free tax-filing software, prosecutors in the US announced on Wednesday. Attorneys General Letitia James in New York and Herbert Slatery III 1in Tennessee led efforts to sue Intuit for allegedly scamming …

  1. Kev99 Silver badge

    Wow! $30 a person. Whoopee-doo-da. And the lawyers will walk away with a several million each as compensation. That's fair compensation? Intuit and all others who get sued for compensation should pay all the legal fees separately from the damages.

    1. teebie

      $30 per person per year. Whether that's a good deal depends on how much Turbotax costs

      1. PRR Bronze badge

        >> Wow! $30 a person. Whoopee-doo-da.

        > $30 per person per year. Whether that's a good deal depends on how much Turbotax costs

        Which should be easily determined. If you can get past all the FREE!-FREE!-FREE! bait-links.

        On-PC tax software is $29.95 and up. Most vendors try to up-sell you with vague "tiers" from single person to small business. I usually pay $40-$60 for HRBlock, PLUS $20-$30 for State, PLUS fees for on-line filing, AND now fees for paying with a credit card. Say a hundred bucks.

        I WON'T use TurboTax since, at the dawn of the 21st century, they installed a root-kit. Which I might even accept, except it was clumsy and screwed-up other software (perhaps just as clumsily coded, but not bothering other code). A simulation app which previously ran OK, now had to have a full Windows re-boot after every run. I wasn't using it daily and TT didn't tell me they were installing malware, so I didn't make the connection for over a year.

      2. Kolobos36

        Ehhhh, I don't think it's a good deal. You gotta pay for the version of turbo tax you use and you gotta pay to get your money deposited into your bank account and I think you gotta pay for something else on top of that. I don't really remember, I just remember having to spend around $200 to do my taxes this year because I refinanced my house last year and that made it so that I didn't qualify for the "Free" version.

        1. teebie

          That much? Then I agree with the "Wow! $30 a person. Whoopee-doo-da." statement expressed about. I don't know whether I'd rather it was 250 (cheating costs) or 600 (cheating costs 3 times over). At 30$ Turbotax still made a profit with their scam.

  2. Henry Wertz 1 Gold badge

    Annoying too

    Besides being blatant false advertising, the Turbotax ad was the most annoying piece of crap waste of time ad you've ever seen, some pair of jackasses would be on screen having what (by tone of voice and cadence) was a normal conversation but all words replaced with the word free. Then the last like 2 seconds they'd (falsely) claim TurboTax is free. The odd thing is the gov't agencies that should be assessing fines for false advertising (like FTC) don't seem to do it at all, you don't hear about these fines and ads being pulled like you do in UK. Even in this case, they were sued in court rather than being fined.

    1. John Brown (no body) Silver badge

      Re: Annoying too

      "Even in this case, they were sued in court rather than being fined."

      And even worse, it's yet another "no fault" settlement. "We didn't do anything wrong, here's some money to shut up and go away!"

  3. llaryllama

    There's a lot I love about the USA but the healthcare and tax situation is so maddening that I don't think I could ever live there.

    The UK is almost as bad on the tax front with HMRC originally promising that free tools will be available for filing under the new MTD regime. They back pedaled on this forcing many small businesses to pay a monthly fee for terrible accounting software that doesn't suit their needs just because it supports MTD.

    Here in Taiwan we can fortunately still choose to file personal and business taxes in person or by mail, or use any of the free web/Windows/Max/Linux/phone apps provided by the government. My tax situation is fairly complicated and it took maybe 5 minutes to file this year.

    1. Ace2 Silver badge

      An unholy alliance of these same tax-prep bastards (Intuit and HR Block) and anti-tax conservative cranks like Grover Norquist makes sure to squash any proposal that could make filing less painful. I hope they all rot.

    2. vtcodger Silver badge

      Paper tax returns

      You can still file paper tax returns in the US if you choose. I think many (most?) can also file user fillable PDFs if they have a compatible browser, the winds are fair, and the force is with them. I opt for paper because our return is usually a bit complicated, the modern web is such a goddamn shambles, and I can take and archive pictures of the returns, spreadsheets and scripts rather than trusting that software to read the electronic returns will still be around if the taxman comes back with questions 3 or 4 years downstream. The latter thing, backwards compatibility, has actually been a problem for a few folks using commercial products in the past.

      My state (Vermont) also accepts paper returns.

      I don't actually have anything against user fillable PDFs and I'd probably use them if our taxes were just wages and a bit of savings/investment income.

      1. Michael Wojcik Silver badge

        Re: Paper tax returns

        I do mine electronically, but archiving isn't an issue. I have paper and PDF copies of all my returns.

        But I use the desktop Turbo Tax, not the web version. I wouldn't touch the web version if they paid me.

        My complaint with Intuit is that this year they made it damned near impossible to get the desktop version. Every damn link from the website led back to the goddamned web version. I had to do multiple web searches and dig through results to get a download for the desktop version. Intuit really want to own your data, and to kill the standalone product.

        It also does that obnoxiously obsequious thing when it's checking for updates, with messages like "OK, we know it's taking a little while". Microsoft does the same thing these days in products like Teams. Stop patronizing me, you bastards; I was writing software before you were a gleam in some traveling sales rep's eye.

      2. Snake Silver badge

        Re: Paper tax returns

        I did use paper tax forms until Trump's "improvement" of the tax return process, in which most of the 1040 line items were removed and placed into sub-forms. I ended up with a stack of completed forms, unsure if I had properly claimed all forms necessary / possible for best deductions, and ultimately frustrated at this so-called "benefit".

        So I ended up buying [the fully installed version of] TurboTax, if only because I'll be damned if I give Intuit my personal information via their [required] on-line registration and forms completion, before they hand that data off to the IRS. Taking personal responsibility for data security, and all that.

      3. llaryllama

        Re: Paper tax returns

        What I love about the system here is that you (mostly) feel like the people charged with tax collection are genuinely trying to help you and just trying to collect a fair amount of tax.

        There are still a lot of elderly people or individual with complex tax affairs who choose to go to the tax office in person. The (usually) friendly staff will go over your files and help you fill out a paper return in the most beneficial way possible for you as the tax filer.

        It's the same with our e-filing, all provided by the government and the software is very good at calculating the most efficient way to file so you pay the minimum amount of tax. It just makes the whole yearly process so much less painful. Anything else just seems madness to me. You let a private company make billions off tax filing to what end?

  4. redpawn

    Like that free lunch...

    from a timeshare company. If you only have a W-2 form from work, then this will work for free, as long as you click past multiple warnings that you might not be getting the best refund. If you have a slightly more complex return, such as a scholarship or a penny of dividend income fork over some real cash. Even then they try to up-sell you to a more expensive version.

  5. Pascal Monett Silver badge

    "we admitted no wrongdoing"

    We don't care that you didn't admit any wrongdoing.

    You're forking over $141 million - that is an admission of guilt. That and the fact that you are forced to stop advertising "free" and change your practices.

    You were doing wrong and without this lawsuit you would not have changed.

    I really hate this attitude of "well there is no judgement so we dinna do nuthin' wrong".

    1. Anonymous Coward
      Anonymous Coward

      Re: "we admitted no wrongdoing"

      Innocent until proven guilty (in a court of law). The rule of law and all that crap. Isn't democracy/civilisation great?

    2. Boolian

      Re: "we admitted no wrongdoing"

      Yeah, I can't square that at all, apart from it being the sharkey semantics of the wide.

      "...engaging in these deceptive marketing ploys is illegal"

      "We admitted no wrongdoing"

      As ever, the perennial cry of the spiv: "I done nuffink wrong guv'nor"

      So, basically 'We pled "Not guilty, a big boy did it and ran away" - but the court found us guilty of illegal practices anyway'

      Which subsequently becomes, "We bunged everyone a few quid, to dry their eyes, out the goodness of our honest hearts. Say no more and we'll carry on, carrying on"

      It was ever thus.

    3. Doctor Syntax Silver badge

      Re: "we admitted no wrongdoing"

      I find it amazing that they have to promise not to make mis-leading claims. Isn't making such claims illegal in the US? Or do US businesses only have to obey the law when they promise to do so?

      TFA describes the states as suing Intuit. That's the source of the problem. A civil suit can be settled like this with no admission of wrongdoing; in a criminal prosecution the only way to stop it going to a full trial with witnesses giving evidence would be a guilty plea.

      1. Anonymous Coward
        Anonymous Coward

        Re: "we admitted no wrongdoing"

        "I find it amazing that they have to promise not to make mis-leading claims. Isn't making such claims illegal in the US"

        I think the intent is, Intuit promises to follow the law as part of this settlement. Step out of line again, and not only can they be prosecuted for the new infraction, but they violated the terms of this settlement, which means this agreement is no longer valid.

        It's like if someone gets nabbed for drunk driving. They may agree to a fine and time served, with no prison time as long as they agree to follow all traffic laws for 5 years. If they get cited for driving without insurance a few months later, they'll pay a fine for no insurance, and the original judge may send them to prison on the original drunk driving charge.

        (Probably oversimplified, US-centric, and IANAL)

        1. Alumoi Silver badge

          Re: "we admitted no wrongdoing"

          which means this agreement is no longer valid

          So the poor suckers have to give the money back to Intuit?

  6. DrXym Silver badge

    Welcome to America

    A country which thinks it is smart that people have to do their own tax returns, vastly increasing the amount of auditing the IRS has to do and the amount of grief everyone suffers on annual basis. And so there is a massive industry of accountants and software there to relieve the grief that shouldn't even be there.

    It should be like most other modern countries - the majority of people are paid through wages and so taxes can be deducted at source. So a much smaller % of people need to file returns or claim some other kind of tax relief.

    1. John Brown (no body) Silver badge

      Re: Welcome to America

      Yeahbut! "Big" government "interference" in peoples "freedoms". At least that's often the cry from freedom loving voters when tax reforms are proposed. They don't seem to get the loss of freedoms incurred by having to do their own tax returns and being audited by the IRS.

    2. rcxb1

      Re: Welcome to America

      > It should be like most other modern countries - the majority of people are paid through wages and so taxes can be deducted at source.

      This is very much the case in the US. What made you think it was not?

  7. Spanners Silver badge

    This should be a lesson to them.

    My understanding is that, unlike in developed countries, the reason everyone in the USA has to submit their own tax returns is because a cabal of tax accountants and software makers like Inuit lobbied for it.

    Now there is further proof that the lobbiers were going against the public interest.

    But will this cause a change? No. It doesn't when anything else shows up as a bad idea whether it is health insurance, armed civilians on the street or the huge subsidies given to the US oil industries. They can't "because rich people and corporations" override the people's needs every time!

    I will check my P60 when it arrives but my month 12 payslip had my correct PAYE on it. I suspect that I am sad/geeky because I even check it.

    People in the USA have the nerve to try and claim that they are free and I am not?

    1. rcxb1

      Re: This should be a lesson to them.

      Two things about the US cause situations like this to look strange to outsiders:

      1) The US is huge. It's equivalent to the EU, rather than a single country. It is difficult to change things across the whole US. How much effort would it be to get consistent and unified standards across all EU countries with no exceptions?

      2) The US is often the first to develop a working system. Once it is in place, it becomes difficult to change. Those who do not have a working and well-entrenched system come along after can take a look at what did/didn't work well and implement an improved system for themselves. This goes for everything from health care, to metric, to other issues like electrical power systems, broadcast TV standards, etc.

  8. Great Bu

    Because it's way more complicated than the UK......

    The main learning curve I had moving from the UK to the USA was doing our tax returns - two big points really:

    1) The system is way more complex than the UK - there are not only far more things that can be deducted from taxes than in the UK for the individual (not just marital status, number of kids but also mortgage interest and insurance, educational costs, healthcare costs (even stuff you also pay for in the UK, like dental and vision services), charitable donations for federal tax returns but also for state taxes absolutely random stuff like (in Maryland where I live) running an oyster aquaculture, donating hunted venison to charity, being a quality teacher etc. and then also county taxes depending on what county you live in) and it is perfectly common for individuals to live in one state / county but work in another, making it very complex for a simple employer based PAYE type system to be administered as it would require the employer to know all that information in order to properly withhold the appropriate amount of tax from each pay check.

    2) Having said all that, there is absolutely no reason why the federal and state governments could not provide a simple online service for all tax payers to use for free in submitting their tax returns (as is provided by the current private providers) - this is the part that is the lobbyist driven scam where lawmakers in the pocket of the big accountancy firms repeatedly bat down legislation aimed at requiring just that and force the IRS to stick with arcane paper based systems (even the online tax software ultimately just fills in the form for you and emails it to the IRS).

    On the plus side, though, the arcanity and complexity of the process makes us all very paranoid about getting landed with a big bill come tax time so we tend to get our employers to over-withhold taxes from our pay checks and get a nice little savings bonus at tax return time (usually around 2-3% of my annual pay) - would that money have been better off reducing my interest-bearing debt instead of waiting in some employer account ? Yes, certainly. Do I have the willpower to use that extra cash for that purpose ? No. No I do not.

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