TUCSON, Ariz. (KGUN) — Arizona Attorney General Kris Mayes announced $3.3 million of a $141 million settlement with TurboTax, will go towards the state.
The 2022 settlement centers around online advertisements sending customers to TurboTax's paid service. Millions of Americans ended up getting charged for tax preparation; services they could have received for free through TurboTax's IRS Free File program.
According to New York Attorney General Letitia James, TurboTax owner Intuit, will pay out $29 to $85 to over 4 million taxpayers across the country.
AG Mayes says when it comes to the $3.3 million making its way to Arizona, the funds will be dispersed among over 108,000 customers.
The settlement applies to those who filed through the paid program during tax years 2016, 2017 and 2018.
According to a court filing, the IRS and Intuit formed a public-private partnership in 2002. In the agreement, Intuit would offer a version of its TurboTax software for free for low-income users. In exchange, the IRS agreed not to compete with TurboTax by creating its own electronic tax preparation.
From 2017 through 2021, Intuit made the free-file software available for those who receive the earned income tax credit.
But what the FTC and state attorneys general alleged was Intuit knew customers were confused about the products offered by TurboTax.
“The deceptive practices of TurboTax took advantage of good faith taxpayers and nudged them into giving up some of their hard-earned dollars. This settlement rights a wrong and puts that money back into the pockets of taxpayers who never should’ve paid to simply file their taxes," Mayes said.
“The company used confusingly similar names for both its IRS Free File product and its commercial ‘freemium’ product,” the New York Attorney General’s office said. “Intuit bid on paid search advertisements to direct consumers who were looking for the IRS Free File service to the TurboTax ‘freemium’ product instead. Intuit also purposefully blocked its IRS Free File landing page from search engine results during the 2019 tax filing season, effectively shutting out eligible taxpayers from filing their taxes for free.”
The FTC called this practice a “bait-and-switch.”
Checks will be sent out throughout the month of May.
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Austin "AJ" Janos is a producer for KGUN 9. He graduated in 2022 from the University of Arizona where he worked at UATV3 while attending college. Share your story ideas and important issues with AJ by emailing aj.janos@kgun9.com.
