‘False claims and buried disclosures’: FTC says TurboTax tricks people into thinking they can file for free
AAs the tax filing deadline approaches, the 2022 tax season is getting juicy.
On Monday, the US Federal Trade Commission (FTC) formally accused the company that owns TurboTax of tricking people into believing they can file their taxes for free – when in reality many have to pay.
The FTC, an independent government agency focused on consumer protection, has filed a lawsuit in California demanding that the courts prevent Intuit from widely advertising TurboTax’s tax preparation services as free. The agency targets an increasingly common human experience: when we doing a bunch of online tax return work under the impression that it’s free, only to find out you have to pay in the end.
While TurboTax is indeed free for some people, according to the FTC, others find “after investing time and effort gathering and entering their sensitive personal and financial information into TurboTax” that they will need to upgrade to a paid version. from TurboTax to complete their returns.
This is misleading, according to the complaint.
Intuit disagrees. In a blog post Monday night, the company said the FTC’s arguments were “simply not credible,” saying that “over the past eight years, TurboTax products have helped nearly 100 million Americans to file their taxes for free.”
“Far from driving taxpayers away from free tax preparation offers, our free advertising campaigns have led more Americans to file their taxes for free than ever before and have played a pivotal role in raising awareness about free tax preparation. tax returns,” Kerry McLean, executive vice president and general counsel, said in a statement.
McLean said the company’s advertisements helped drive free TurboTax product adoption, “driving approximately 60% growth from 11 million free filers in 2018 before the campaign launched to more than 17 million free declarants in 2021”. As of the end of last July, TurboTax said it had processed more than 45 million federal tax returns.
TurboTax’s “deceptive” marketing practices
The FTC criticizes TurboTax on several fronts, particularly its ads promoting “freemium” products on television and on the Internet since at least 2016.
There are TurboTax advertisements, according to the FTC, “in which almost every word spoken is the word ‘free,'” despite the fact that the preparation is actually only free for certain taxpayers with simple returns. The FTC alleges that fine print disclaimers are posted quickly, in small text, and often not read aloud.
The complaint claims that there are similar issues regarding transparency on TurboTax’s homepage. According to the complaint, the website did not adequately explain to customers what a “simple tax return” is, or facilitate discovery early in the tax return process.
“Intuit continues to bombard consumers with the message that they can file their taxes for free,” it read. “Intuit lures consumers with misleading advertisements, then composes [sic] deception with more false claims and buried revelations.
This isn’t the first time TurboTax has been accused of sketchy business practices. In years past, ProPublica has reported that Intuit lobbied against government free file options, tricking customers into paying and deliberately hiding its free file page from Google search results.
What about TurboTax and the IRS Free File?
Contributing to the confusion is that you can File your taxes for free – and, until recently, TurboTax partnered with the IRS to let you do just that.
TurboTax was a longtime participant in IRS Free File, a government initiative that allows taxpayers to electronically file their individual federal tax returns for free. IRS Free File gives Americans below a certain income threshold access to free guided tax preparation through sites like TurboTax; beyond this threshold, people can fill out free forms to declare their taxes themselves.
But last year, TurboTax decided not to renew its role in the IRS’ free files program. (H&R Block did the same in 2020.) At the time, TurboTax said “conflicting demands from those outside of the program” made it impossible to continue participation while providing benefits to customers.
Intuit addressed the Free File situation in its Monday response to the FTC’s complaint, saying it “is, at all times, compliant with IRS requirements.”
In its lawsuit Monday, the FTC asked the court to intervene and curb Intuit’s advertising efforts while the agency proceeds with an administrative hearing related to TurboTax.
How to file your taxes for free
Legal drama aside, you might be wondering how to file your taxes for free, given that the deadline is just weeks away.
Depending on how much money you make, the IRS Free File program is probably your best bet. If your adjusted gross income for 2021 is $73,000 or less, you likely qualify for guided tax preparation through IRS partners. They include free 1040 tax filing, online taxes at OLT.com, ezTaxReturn.com, FreeTaxUSA, FileYourTaxes.com, TaxAct, TaxSlayer, and 1040NOW.net. Many have age, income or location requirements; visit the IRS website to find the one that meets your needs.
If your adjusted gross income is over $73,000 and you know how to do your taxes, you can use the free fillable forms. These don’t come with free tax assistance, so be careful.
Outside of IRS Free File, you might want to check individual tax preparer websites to see what free offers they currently offer. TurboTax, for example, will let you file for free if you have the aforementioned “simple tax return” – a Form 1040 only. H&R Block and Cash App Taxes both advertise their own $0 online tax filing services.
No matter what you choose, be sure to check the fine print and keep an eye out for supplements.
Still learning the basics of personal finance? Let us teach you the key financial lessons you MUST know. Get helpful tips, expert advice, and cute animals delivered to your inbox every week.
More money :
10 Best Tax Software Programs
How to file taxes for free in 2022
$1.5 billion in unclaimed tax refunds are about to expire
© Copyright 2021 Advertising Practitioners, LLC. All rights reserved.
This article originally appeared on Money.com and may contain affiliate links for which Money receives compensation. The views expressed in this article are those of the author alone, not those of any third-party entity, and have not been reviewed, endorsed, or otherwise endorsed. Offers may be subject to change without notice. For more information, read Money’s full disclaimer.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.