New York Attorney General Letitia James has announced that taxpayers who paid for TurboTax instead of using the free filing software may soon receive a settlement check. According to James, TurboTax owner Intuit agreed in May 2022 to pay $141 million to lower-income Americans who were “unfairly charged” for the free tax-filing software as part of a multi-state agreement. Around 4.4 million consumers were affected. Intuit’s spokesperson stated that the company is “pleased to have reached a resolution with the state attorneys general that will ensure the company can return our focus to providing vital services to American taxpayers today and in the future.”
To be eligible for the TurboTax settlement payment, taxpayers must have used TurboTax for federal returns for tax years 2016, 2017, or 2018 but were eligible for the free version of the software through IRS Free File. The settlement applies to those who were eligible for Free File and started 2016, 2017, or 2018 federal returns with Intuit’s free software. Those who paid Intuit to complete their return and were then told they didn’t qualify for the free software and didn’t use Intuit’s Free File product in a previous year may also receive a payment.
The settlement fund administrator, Rust Consulting, will notify eligible consumers by email, and checks will start being sent next week. While most eligible consumers are expected to receive about $30, some may get up to $85 if they used TurboTax for the three consecutive years named. Payments begin in May, but some checks won’t reach consumers until early June, depending on the mailing date. However, those who don’t receive the funds by mid-June can request a reissue through the website with their claimant ID issued by email.
New York Attorney General Letitia James criticized TurboTax’s “predatory and deceptive marketing,” saying that it cheated millions of low-income Americans who were trying to fulfill their legal duties to file their taxes. While roughly 70% of taxpayers qualify for Free File, only 2% used it during the 2022 filing season, according to the National Taxpayer Advocate’s annual report to Congress.
