INDIANAPOLIS — Thousands of Indiana residents who paid TurboTax to file their taxes could be in line for some money.
Indiana Attorney General Todd Rokita has finalized a $2.9 million settlement with TurboTax owner Intuit over alleged deceptive advertising practices.
Indiana was one of dozens of states participating in a $141 million settlement involving Intuit. Attorneys general accused Intuit and TurboTax of misleading customers by advertising “free” tax filing services, only to steer them toward paid services. The $2.9 million represents Indiana’s portion of the settlement.
Intuit offered two free versions of TurboTax. One was through the company’s participation in the IRS Free File Program, which allows taxpayers earning roughly $34,000 and members of the military taxes to file for free. In exchange for Intuit’s participation in the program, the IRS agreed not to compete with Intuit and other companies by creating its own tax prep service.
Intuit also offered TurboTax Free Edition, “freemium” software that was only free to taxpayers who filed “simple returns” as defined by Intuit. But investigators said TurboTax marketed the product aggressively and promoted it as a free service. However, only about a third of U.S. taxpayers were eligible for the “free” service. IRS Free File Products, on the other hand, were free for 70% of taxpayers.
Customers who were eligible for the free service but ended up paying will receive a direct payment of about $30 for each year they were affected from 2016 through 2018, according to the settlement. About 94,000 of the eligible transactions involved Indiana customers, according to the Indiana Attorney General’s Office.
A settlement administrator will contact customers to help them retrieve their money. Hoosiers don’t need to take action until the settlement administrator contacts them, according to Rokita’s office.
Intuit mandated several reforms as part of the settlement, including better disclosures in its advertising.