Death and taxes: Intuit has been found misleading US citizens regarding the true nature of its "free'" products. The tax filing software and services provided by the company must genuinely be free to warrant such labeling, according to the Federal Trade Commission.
The FTC has unanimously determined that Intuit engaged in a false advertising campaign regarding its tax filing software. The company, which produces TurboTax, the market leader in the tax filing business, violated Section 5 of the FTC Act by offering "free" financial software products that many consumers were unable to access.
According to the Commission's Final Order, Intuit cannot advertise or market any product or service as a free offering unless it is genuinely free for all customers. The software corporation must also clearly disclose the percentage of taxpayers that can access one of its free offerings, the FTC said. Furthermore, if a product is not free for the majority of consumers, Intuit must disclose that limitation as well.
The FTC order confirms the initial decision by Chief Administrative Law Judge D. Michael Chappell, who ruled that Intuit was promoting "free" tax filing tools that millions of consumers could not access. Workers who received a 1099 form in the gig economy, farmers, and other taxpayers were excluded from the free offering, the judge said, and around two-thirds of tax filers were not eligible for TurboTax's free product.
Intuit responded to the latest ruling by stating that the FTC issued a "deeply flawed decision," which the company has now appealed. According to Intuit, the FTC ruling is the result of a "biased and broken system" where the Commission serves as accuser, judge, and jury. The company expressed that it's not surprising that FTC Commissioners "ruled in favor of the FTC," as they have consistently done in every appeal for the last two decades.
Intuit has long lobbied against any potentially free tax filing service or even pre-filled forms provided by the IRS, a practice common in many developed countries. In May of last year, the company settled a class-action lawsuit with all 50 US states for encouraging millions of low-income citizens to use paid TurboTax software instead of free, federally supported tax filing services. As part of the settlement, roughly 4.4 million US citizens received a (modest) check from Intuit, with most customers receiving around $30.