Sen. Elizabeth Warren (D-MA), Rep. Katie Porter (D-CA), and Rep. Brad Sherman (D-CA) issued a letter to Intuit CEO Sasan K. Goodarzi, demanding answers regarding the alleged deceptive promotions of TurboTax's 'bogus' free tax preparation services, as per the report of Fox 5 Atlanta.
What Is the Free Tax Preparation Service of TurboTax?
Until 2021, Intuit provided a free version of TurboTax to low-income taxpayers through the IRS' Free File Program. However, the company quit the program as they wanted to "further innovating in ways" that are not permitted under the present Free File guidelines.
The Free File system, a collaboration between the tax industry and the IRS, was created to make it easier for low- and middle-income taxpayers to file their returns online.
TurboTax's Alleged Deceptive Promotions
In the letter sent on Monday, April 18, Sen. Warren claimed that TurboTax's Free File program duped taxpayers into paying for services that should have been free. According to Warren, Free File was designed to cover 70% of American taxpayers, but only about 3% of taxpayers are engaged each year as of 2018.
Samuel Levine, Director of the Bureau of Consumer Protection, said that TurboTax is bombarding consumers with advertisements for "free" tax filing services but then charging them when it's time to file. Hence, he urged the court to put an end to the bait-and-switch scheme and protect people during tax season.
The Federal Trade Commission (FTC) has sought a federal judge to require Intuit to stop using deceptive adverts during tax season.
The FTC voted 3-1 to proceed with the lawsuit.
Read also: Take Care of Your Tax Filing NOW: Tax Returns, Extensions, and More Tips for Your 2021 Taxes
Intuit Is Also Being Accused of Using the 'Revolving Door' in an Unethical Manner
Intuit was also accused of unethical use of the "revolving door" to engage former regulators to defend its unscrupulous business practices that defraud taxpayers of billions of dollars.
The Verge cited a report which found that Intuit's lobbying activities included former government officials, including former members of Congress. Both Democrats and Republicans have received funds from Intuit's corporate political action committee. The company spent $3.3 million on lobbying in 2021.
According to a recent court filing, the firm hired former FTC head Jon Leibowitz to defend it against an FTC lawsuit. The Verge also referred to another report which found that Leibowitz was one of dozens of former FTC officials with such potential revolving door conflicts.
What Is Intuit's Response to the Letter?
Following a meeting with FTC Chair Lina Khan, Intuit stated it has eliminated ads that the FTC had deemed deceptive.
Intuit also said that it will fight the lawsuit.
According to Intuit Director of Corporate Communications Derrick Plummer's statement to The Verge regarding the matter, Intuit's free tax preparation service has helped approximately 100 million Americans file their taxes for free in the last eight years.
He claimed that the company is upfront and honest with its consumers, as well as open and transparent about its advertising activities. He added that Intuit's participation in the Free File program was carried out in accordance with IRS regulations and with the IRS's monitoring.
Is TurboTax a Good Tax Software?
As per previous report, TurboTax was named by CNET as the best tax software for most people as the publication said it integrates tax expertise with a simple user interface for a seamless user experience.
