NEW YORK: According to New York Attorney General Letitia James, Intuit Inc., based in Mountain View, California, will stop TurboTax’s “free, free, free” ad campaign and pay compensation to roughly 4.4 million taxpayers under the conditions of a settlement signed by attorneys general from all 50 states.

New York’s attorney general stated Wednesday that the business behind the TurboTax tax-filing application will pay $141 million to consumers throughout the country who were duped by false promises of free tax-filing services.

James said her investigation into Intuit was triggered by a ProPublica story from 2019 that indicated the corporation was using deceptive methods to drive low-income tax filers away from federally funded free services and toward its own commercial offerings.

“For years, Intuit misled the most vulnerable among us to make a profit. 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 a statement. “This agreement should serve as a reminder to companies large and small that engaging in these deceptive marketing ploys is illegal.”

“As part of the agreement, Intuit admitted no wrongdoing, agreed to pay $141 million to put this matter behind it, and made certain commitments regarding its advertising practices,” representatives for Intuit said in a blog post Wednesday. “Intuit already adheres to most of these advertising practices and expects minimal impact to its business from implementing the remaining changes going forward.”

Intuit supplied two free versions of TurboTax until last year. One was through its participation in the Internal Revenue Service’s Free File Program, which is aimed at taxpayers earning less than $34,000 and military personnel. Intuit dropped out of the programme in July 2021, claiming in a blog post that it could offer more benefits without the program’s restrictions.

Intuit also sells a commercial version called “TurboTax Free Edition,” which is only for taxpayers who have “simple returns,” as defined by the corporation.

According to documents obtained by ProPublica, executives at Intuit were aware that they were misleading customers by touting free services that were not available to all.

“The website lists Free, Free, Free and the customers are assuming their return will be free,” an internal company PowerPoint presentation said. “Customers are getting upset.”

Consumers who started using the commercial TurboTax Free Edition for tax years 2016 through 2018 and were informed they had to pay to file even though they were eligible for the version of TurboTax given as part of the IRS Free File programme will get reimbursement under the deal.

Consumers should expect a direct payout of around $30 for each year they were duped into paying for filing services, according to James. They will receive alerts and checks in the mail automatically.

“We empower our customers to take control of their financial lives, which includes being in charge of their own tax preparation,” an Intuit spokesperson told ProPublica in a statement in 2019.

The spokesperson added that a “government-run pre-filled tax preparation system that makes the tax collector (who is also the investigator, auditor and enforcer) the tax preparer is fraught with conflicts of interest.”

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