TurboTax maker Intuit and other tax software firms have fought free tax filing for years. Now the government is fighting back.
to discourage millions of taxpayers from taking advantage of Free File. The lawsuit is pending, with both sides currently engaged in discovery to prepare for trial.
More than 34.5 million of those eligible taxpayers, however, ended up using the Free File Alliance members’ paid software. The auditors’ conclusion was that the program was not “operating as intended” — that “eligible taxpayers attempting to prepare and e-file their returns at no cost are diverted to tax return preparation services that are not free.”
Intuit did so from Nov. 13, 2018, to April 26, 2019, the FTC says. Intuit denies that. Rather than block search access to the page, Rick Heineman, the company’s vice president of corporate communication, told me that Intuit “optimized it for search.” In fact, the FTC says, TurboTax is free only for users with the simplest tax filings. “For many others, Intuit tells them, after they have invested time and effort gathering and inputting into TurboTax their sensitive personal and financial information, ... that they cannot continue for free; they will need to upgrade to a paid TurboTax service to complete and file their taxes.”
In tax years 2018 and 2019, however, those claiming student loan interest deductions were no longer eligible for what the firm called its “freemium” program, the FTC says. Customers receiving income as independent contractors, such as gig workers, are not eligible; that may not be clear to users until they reach the point in the process where they disclose the nature of their earnings or deductions, at which point they’re required to pay for a program upgrade.
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