I want to hold the tax-preparation companies accountable and I want to deter this behavior." "That was a major corporation taking advantage of the consumer," he told the Times. In a statement to the Los Angeles Times, Intuit said that it stands behind its actions and that "ny suggestion that Intuit does not support the IRS Free File Program is flat wrong." H&R Block told the Times it was "proud to have helped millions of Americans file their returns under the Free File program" and has updated its practices to make Free File easier to find.įeuer, the LA city attorney, compared the behavior of the tax-prep companies to that of Wells Fargo, the bank he sued in 2015 over its deceptive practices. The products are also confusingly named: The "Free Edition" of TurboTax actually charges a fee to file state forms, while the truly no-cost version is named "Freedom Edition" and isn't listed on its homepage.
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For example, reporters discovered that Intuit used a bit of code to hide the free version of TurboTax from Google and other search engines. ProPublica found that tax-prep companies used a range of tactics to lead low- and moderate-income people into paying to file taxes.
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Only about 3% of taxpayers eligible for Free File are using it - resulting in Americans paying an estimated $1 billion a year in unnecessary fees to the tax-prep companies, by ProPublica's calculations. In exchange, the IRS promised it wouldn't offer its own free filing software. A consortium of tax-prep companies formed the Free File Alliance and agreed to offer no-charge tax prep to millions of Americans. The Free File program went into effect in 2003.
In the filings, Feuer writes that for years, the companies have been "actively undermining public access to the IRS's 'Free File' program, while simultaneously employing deceptive and misleading advertising and design schemes intended to induce taxpayers" into buying expensive TurboTax and H&R Block products. LA City Attorney Mike Feuer filed the civil complaints on Monday against Intuit and H&R Block on behalf of the people of California.
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The IRS Free File program is intended to help people who make less than $66,000 a year file their taxes free using commercial services.īut that program - and the consortium of tax-prep software companies that take part in it - are under scrutiny after reporting from ProPublica found that the companies make the free options difficult to find and instead funnel eligible taxpayers toward profit-generating options. Los Angeles' city attorney is suing tax-preparation software companies H&R Block and TurboTax-maker Intuit, alleging that they "defrauded the lowest earning 70 percent of American taxpayers" by impeding public access to an IRS program. The IRS Free File program is under scrutiny after reports that tax-prep companies made it difficult for people to actually file their taxes free of charge.
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