By Dean Seal


Intuit Inc. will pay a $141 million settlement to resolve claims from all 50 states and Washington D.C. that it deceived low-income taxpayers into paying for TurboTax services that should have been free.

New York Attorney General Letitia James said the agreement would provide restitution to 4.4 million users of TurboTax's free edition between 2016 and 2018 who were charged to file their taxes despite qualifying for a free-filing program from the Internal Revenue Service that TurboTax offered.

The company was also ordered to pull its "free, free, free" advertising campaign, which allegedly promises free tax preparation services to customers only to later charge the majority of them after they've already inputted their personal and financial information.

The ad campaign is the subject of a lawsuit from the Federal Trade Commission, which said in March that roughly two-thirds of U.S. taxpayers in the 2020 tax year couldn't qualify for TurboTax's free filing.

James's office opened an investigation into Intuit following media reports that the Mountain View, Calif.-based software company was steering low-income consumers away from its IRS-supported free tax services.

New York is now leading a contingent of states that claim Intuit engaged in deceptive and unfair trade practices to limit customers' participation in the IRS Free File Program by using similar names for its free-filing product and its commercial "freemium" program.

The company also blocked the landing page for its free-filing program from search engine results in the 2019 tax filing season and attempted to direct customers away from the program through paid search advertisements, the states allege.

Intuit's $141 million restitution payment, after losing $2.5 million administrative fund costs, will provide customers with $30 payments for each year that they were unduly charged for filing services.

Shares of Intuit fell 2.66% after the news broke Wednesday.


Write to Dean Seal at dean.seal@wsj.com


(END) Dow Jones Newswires

05-04-22 1130ET