Get Your Money: $141M TurboTax Settlement For Deceptive Practices

Consumers who used Intuit’s TurboTax software between 2016 and 2018 could be eligible for up to $85 as part of a 50-state settlement over the company’s tactics that allegedly tricked users into paying for tax services that should have been free.

The $141 million settlement also requires Intuit to suspend its ad campaign which promised free tax prep but actually charged many consumers for the service.

The settlement stems from a 2019 report by investigative journalism nonprofit ProPublica that found Intuit used deceptive tactics to steer low-income tax filers away from federally supported free services and into a product that charged a fee to file tax returns.

Eligible customers must have used a TurboTax product in the 2016, 2017, or 2018 tax years, been eligible to use an Intuit IRS Free File Product, begun their tax returns using a TurboTax Free Edition Product, but then have been informed that they were ineligible to use that product, and not have used the IRS Free File Product in a previous tax year.

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.

The payment amount is based on the number of years a consumer used TurboTax and whether they qualify. Payments will be mailed throughout May to eligible consumers, who will receive an email from the settlement fund administrator informing them of the approximate amount of their payment. The settlement website states that consumers don’t need to take any action to receive their payment.