Checks Are On The Way In $141 Million TurboTax Settlement

If you bought TurboTax online filing products between 2016 and 2018, check your email—you might be entitled to a settlement payment.

Announcement

New York Attorney General Letitia James has announced that “consumers who were tricked by TurboTax’s owner Intuit
INTU
into paying for free tax services” will begin receiving checks as part of a $141 million settlement. According to James, approximately 4.4 million consumers nationwide will receive checks as part of a multistate settlement. All 50 states and the District of Columbia have signed the agreement.

Background

The agreement with Intuit was reached after an investigation into Intuit’s marketing, advertising, promotion, and sale of certain online tax preparation products, and whether Intuit’s conduct constituted deceptive or unfair business acts or practices that violated consumer protection laws. Intuit produces TurboTax tax filing software.

Specifically, in 2022, the Federal Trade Commission alleged that the word “free” misled consumers into believing they could file their taxes for free with TurboTax. In fact, the FTC argued in 2022, “most tax filers can’t use the company’s “free” service because it is not available to millions of taxpayers, such as those who get a 1099 form for work in the gig economy, or those who earn farm income.” The FTC found that, in 2020, approximately two-thirds of tax filers could not use TurboTax’s free product.

Intuit fired back, calling the FTC’s arguments “just not credible.”

Intuit also noted at the time that it “has always supported consumers filing for free as a founding member of the IRS Free File program and in our other practices.” Intuit also announced that as of the 2022 filing season, it was opting out of Free File.

A settlement into the allegations was reached in May 2022. The payments related to the settlement are now being paid out. As a result, James said, “TurboTax’s predatory and deceptive marketing cheated millions of low-income Americans who were trying to fulfill their legal duties to file their taxes.” She continued, “Today we are righting that wrong and putting money back into the pockets of hardworking taxpayers who should have never paid to file their taxes. I thank my fellow attorneys general for their partnership in this effort to stand up for ordinary Americans and hold companies who cheat consumers accountable.”

Who Benefits

The settlement is intended to benefit those who paid to file their federal tax returns through TurboTax for tax years 2016, 2017, and 2018, but were eligible to file for free through the IRS Free File Program—that’s approximately 4.4 million consumers nationwide. According to the Attorney General, consumers eligible for payment will be notified by email by the settlement fund administrator, Rust Consulting.

When To Expect A Check

Consumers who are eligible to receive a payment will receive a check in the mail automatically. There is no need to file a claim. Checks are expected to be mailed throughout May 2023.

How Much?

The amount you could receive is based on the number of tax years for which you qualify. Most consumers will receive between $29 and $30. If you filed for three consecutive years, you could get up to $85.

More Information

An Intuit spokesperson referred me to this post on their site, adding, “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.”

For more information about the settlement, visit www.AGTurboTaxSettlement.com, a site managed by Rust Consulting, the settlement fund administrator. Do not contact Intuit directly about the settlement.

(Author’s note: Updated to add statement from Intuit.)