Senator Elizabeth Warren criticized TurboTax for charging taxpayers for simple tax returns and upselling them during the filing process, even when they qualify for free filing through the IRS’s Direct File tool. She highlighted how a sample taxpayer would pay $133 using TurboTax and be solicited for additional costly services multiple times, diverting them from free options. Warren sent a letter to the FTC urging them to take action to protect taxpayers from companies like TurboTax that add unnecessary fees.
The Federal Trade Commission ruled that Intuit, the company behind TurboTax, deceived customers by claiming their online tax filing software is free when most taxpayers would not qualify for free services. The agency required Intuit to clearly disclose the percentage of consumers that actually qualify for free services and prohibited them from advertising as “free” unless it applies to all consumers. Additionally, Intuit agreed to pay $141 million to low-income filers who were charged for TurboTax services that should have been free as part of a settlement.
Warren’s criticism of TurboTax sheds light on the company’s questionable practices of charging taxpayers for unnecessary services and diverting them from free filing options. The FTC’s ruling and Intuit’s settlement highlight the need for transparency and accountability in the tax preparation industry to protect taxpayers from being misled and overcharged. This story serves as a reminder for taxpayers to be aware of their options and seek out legitimate free filing tools to avoid unnecessary fees.