FTC Sues TurboTax Owner Intuit for Advertising Tax Software as 'Free' (cnbc.com) 78
The Federal Trade Commission sued Intuit in federal court on Monday, claiming it has deceived customers for years by marketing its TurboTax software as free and then charging most users when they file their income taxes. From a report: Around 56 million people filed their taxes with TurboTax in 2021, according to an Inuit shareholder presentation in January. Those individuals filed 54 million W-2 and 40 million 1099 tax forms, the company said. The FTC sued Intuit in U.S. District Court for the Northern District of California, asking for an immediate halt to its "bogus" advertising as taxpayers rush to meet the April 18 deadline to file their 2021 income taxes. The agency also issued a parallel administrative complaint on Monday. That proceeding will determine whether Intuit's conduct violated the FTC Act, the lawsuit said. Much of Intuit's advertising tells consumers they can file their income taxes for free online using TurboTax, but that's not true for most users, including independent contractors in the gig economy who get a 1099 tax form, the FTC said.
"Free" (Score:3)
Yeah, pretty much all the tax software programs do this. They advertise the software as "free" - but its only free if you have the most simple and basic of return imaginable - that you plan on mailing in via snail mail, and you better not need to file state income taxes as that'll cost extra.
Granted, the fact that they're charging money isn't the problem, it's just that they shouldn't be advertising the service as "free" when 99% of their users will not be able to use the free option.
Personally I still actually use TurboTax myself because it'll import financial documents straight from RobinHood, but if any of the cheaper options (TaxAct, TaxSlayer, etc) added that functionality I'd switch for sure.
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I was filing the simplest of returns possible, and I got it done electronically using the same guys I used last year, olt.com. I got my federal return like two weeks later, in the mail (because fuck everything about direct deposit.) They're clear up front who does or doesn't get the service for free. I found them from the IRS site IIRC. It doesn't import anything (except last year's tax info from itself if you used it last year) so if your taxes are nontrivial then you don't want to use them, but it's hard
Re: "Free" (Score:2)
So is TurboTax: https://turbotax.intuit.com/pe... [intuit.com]
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They didn't use to be that opaque, and frankly everything about that page appears to be deliberately confusing. It's easy to see how easily confused people (who have to pay taxes too) would think they would get free filing when they aren't. In particular. Frankly, it's literally at least an order of magnitude more complicated than OLT. That's easy for them because they give away filing to people with much more complicated taxes than TurboTax, but it doesn't change the fact. Normally when you see a table of
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Sigh, this is what I get for not previewing. I originally wrote they used to be more opaque, meant to change it to now they're more transparent, and failed. That's twice I should have previewed in one day because I got triggered by people with typically disingenuous arguments, I must be backsliding into giving fucks.
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A few years ago I tried the IRS' own e-file system, which really is free since it has no advantages over paper. (Actually it's much harder since you have to type in long numbers from your W2's and so on). On the last page when it was time to submit, I got some cryptic error code. I forwarded that to their email help address and never heard back and forgot about it, until months later when I was hit with a fine for failing to file.
Free options are out there. (Score:2)
IRS.gov lists and links a few companies supporting the 'free' thing, the
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Granted, the fact that they're charging money isn't the problem, it's just that they shouldn't be advertising the service as "free" when 99% of their users will not be able to use the free option.
No that's not even the real problem.
The REAL problem is that unlike the rest of the developed world you have to spend hours in Turbotax instead of just letting the IRS send you an invoice for all of the data that companies and employers already need to file to the government.
It should be "If this all looks correct, sign here and return check in pre-paid envelope."
Re: "Free" (Score:2)
If you want simple tax filing, just get rid of deductions and let the IRS scrutinize your every financial transaction.
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Neither of which is necessary to implement what is discussed above.
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I am concerned that anyone thinks the IRS (and associates) isn't already monitoring every financial transaction.
The tax system is designed to be very punitive, particularly to those not rich enough to mount a defense, they were forced to admit this in court.
There are reasons the rich jerks in D.C. are looking at various ways to move to a cashless society, and it's not because they want to help you.
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It is frustrating when my family members that barely pay any income taxes get back 8000 because they have kids.
Your tax "refund" really should cap out with how much you put in.
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Yeah, I do this already. Everything I do is an open book and it's just a goddam nuisance to sort out all the paperwork and fill in the forms.
Since TurboTax once fucked up an electronic submission I use HRBlock software and mail in my forms. Kalifornia itself has charged for electronic submission as long as that's been possible, so I mail in TWICE AS MUCH PAPER AS THE FEDERAL FORM to Kalifornia. HRBlock is cheaper and only a little more annoying than TT. Long ago I used Howardsoft under DOS, which was a
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Granted, the fact that they're charging money isn't the problem, it's just that they shouldn't be advertising the service as "free" when 99% of their users will not be able to use the free option.
No that's not even the real problem.
The REAL problem is that unlike the rest of the developed world you have to spend hours in Turbotax instead of just letting the IRS send you an invoice for all of the data that companies and employers already need to file to the government.
It should be "If this all looks correct, sign here and return check in pre-paid envelope."
Relying on the IRS would work for "simple" situations where you take the standard deduction. Some deductions (such as charitable donations) are not automatically reported to the IRS. Also, I've received Broker statements which failed to include transaction and administration fees.
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Almost correct. To simplify taxes to that point you would need to get rid of everything on Schedule 1, schedule 2, and schedule 3. In other words both political parties would have to give up attempting to social engineer by way of the tax code.
Sadly I don't think this is very likely.
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It should be "If this all looks correct, sign here and return check in pre-paid envelope."
That's exactly how it works in Spain. Plus the Spanish Tax Agency develops its own software for tax returns, available as a webapp ("Renta Web") and mobile app.
https://sede.agenciatributaria... [agenciatributaria.gob.es]
https://sede.agenciatributaria... [agenciatributaria.gob.es]
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Ya, it should be easy for the IRS to collect and sift data for every taxpayer in the U.S., compile their return, and send it to you for signature. Should take them, what, about an afternoon you figure?
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The REAL problem is that unlike the rest of the developed world you have to spend hours in Turbotax instead of just letting the IRS send you an invoice for all of the data that companies and employers already need to file to the government.
That was rather a shock for me when I moved to the US and had to fill out my first 1040, it came with this big boffo book of instructions and even then I had to ask my cow-orkers how to fill out some bits and guess at others. I'm sure I got some bits wrong, but luckily no-one ever complained. What I was used to is getting a letter from inland revenue each year saying "this is what you earned, this is what you paid, this is what you still owe/what we owe you as a refund". I never figured out why you needed
Re: "Free" (Score:1)
Your argument loses credibility the moment you start making things up.
The FTC says 1/3rd of tax filers qualify for "free" tax filing based on income level and their simple tax responsibilities.
If you go to the TurboTax website, they say tax filing costs between $0-119, and they have a chart showing the criteria for different fees. They also have a link that says "simple tax filing" which says:
Situations not covered in TurboTax Free Edition include:
- Itemized deductions
- Unemployment income reported on a 1099-G
- Business or 1099-NEC income
- Stock sales
- Rental property income
- Credits, deductions and income reported on schedules 1-3
And as I recall their ads say "you may be able to file your taxes for free" - the word "may" is not a promise that y
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its about fucking time (Score:1)
The IRS should not accept any returns processed by Intuit.
Re: its about fucking time (Score:2)
Their policies comply 100% with IRS guidelines/regulations, for some reason the FTC doesn't care about that.
They committed no crime, they disclose who does and who does not qualify for free tax filing, just visit their website:
https://turbotax.intuit.com/pe... [intuit.com]
Re: it's about time (Score:2)
Their policies comply 100% with IRS guidelines/regulations, for some reason the FTC doesn't care about that.
They committed no crime, they disclose who does and who does not qualify for free tax filing, just visit their website:
https://turbotax.intuit.com/pe... [intuit.com]
Their tv, radio, and internet ads strongly emphasize the possibility of filing for free. I knew my tax situation was a bit complicated, so I bought the "Premier" edition. The wording "one state included" was on the box. Unfortunately, it meant I could download the tax forms for one state, but still had to pay an additional $25 to electronically file that state. It was deceptive, but I knew the drill from previous years.
It used to be that every edition had access to every tax form, but the wizard only went t
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It seems a lot of them do that - they hook you with a "free" federal return, but they want to charge you for the state return. My state likes to play along too, as they don't allow taxpayers to e-file directly with the state - you have to go through a third party like Intuit.
My state return is pretty simple once you have the federal one sorted out. Copy a few numbers off of the 1040, a couple more off of the W2, look up a couple more in a tax table, do some simple math, and it's pretty much done. So I ju
Re: its about fucking time (Score:2)
Just because you meet the IRSâ(TM)s requirements doesnâ(TM)t mean youâ(TM)re not falsely advertising.
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You're barking up the wrong tree. The IRS would be fine doing that, but Congress expressly forbids them from doing so, because something-something-free-market-government-competition-blah-blah-I-Love-Donations.
I'm retired, been using them for free for a while (Score:2)
Starting around the time I filed my 2014 return. I thought they stopped that program, and I was checking out the free ones listed at the IRS site, when I logged in at the Intuit site and saw advertised that for lower income people they were still offering simple federal and state returns for free.
I wouldn't call it all that simple either, though mine is completely basic, a small pension, social security, some interest on this and that, they still check lots of options that don't apply to me.
Maybe their onli
Re: I'm retired, been using them for free for a wh (Score:2)
A reasonable person understands the limitations, TurboTax is forthright about the limitations of free filing.
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Yeah, because the FTC is widely known for bringing frivolous lawsuits using the truth-in-advertising laws.
Don't you think they have a few lawyers that looked into it before going through all the hassle of drafting the paperwork and filing it with a Federal judge, who absolutely love having their time wasted with nonsense cases?
Do you think they might know something about trade practices law that you don't? Or that having subpoena powers might enlighten them to a thing or two that you don't know?
Same people that lobby to make taxes too difficult (Score:3)
What do you expect from the same companies that lobby and sue the government bodies of the US to prevent simplification of the tax code and for tax filing so that you *have* to use their services in order to file your taxes, and then pull stunts like this. They shouldn't be being charged with just false advertising, they should also be charged with racketeering and RICO charges.
Taxation is Theft (Score:1)
Get rid of Taxes or simplify the system, i.e. ad valorem only and you don't need April 15th or Turbo Tax.
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Get rid of Taxes
That's not going to happen.
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Taxation without representation is theft, and congress works for corporations and not for us. Taxation isn't inherently theft, but it is in an oligarchy, which the USA has always been.
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congress works for corporations and not for us
This is only true if you vote for shitty candidates who serve corporations instead of people. Get involved and get better candidates. Or maybe run for office yourself. Shitty elected officials are not an endemic part of the system: it happens because people either don't care, or play team politics, enabling corrupt, shitty candidates to run and win.
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And the reason we can't switch to ad valorem is because...?
Oh I know. It's because the poor subsidize the affluent [strongtowns.org], who would get really grouchy if they had to start paying full price for the infrastructure they use.
Simplification + granularity reduction (Score:2)
A more realistic compromise is to simplify most taxes for the middle class and you just get auto-taxed if you do nothing, typically coming out of your paycheck.
You'd only "file" if you don't like the defaults or have specialized deductions. The IRS (and hopefully state equivalents) could make a free online system to do the more common filings/deductions.
They'd tend to be incremental so it's not an all-or-nothing form like it is now. For example, filing for education deductions could be a different form-set
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When you have a dysfunctional tax system combined with a dysfunctional government (like in the US) it can certainly seem that "taxation is theft". When taxation is done right - not only in terms of raising them but spending them - it's an expression of support and love for your country, your community, and humanity at large.
Phrases like "taxation is theft" typically get pushed by Republicans who then do their best to make sure that it ends up being true. They already eliminated taxes for billionaires, very
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I'd argue that Reganomics ended when his VP became president. Not 40 years on. Remember the tax legislation that got rid of a ton of loopholes and things like sales tax deductions like ITC for corporations were the result of wrangling by Dan Rostenkowski a Democrat who went to prison for corruption. [wikipedia.org] Both the House and Senate approved the tax rate restructuring.
Advocating for higher taxes paid to justify nearly two decades of record deficit spending most under the guises of Continuing Funding Legislation an
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Get rid of Taxes or simplify the system, i.e. ad valorem only and you don't need April 15th or Turbo Tax.
I agree that our tax laws should be simple enough for citizens to do their own taxes. I argue that as long as income tax exists, there must be a filing deadline if you are not going to accept the standard deduction.
I am a proponent of a fixed tax rate and limited deductions. Have a standard deduction based on age ranges. Everything above that gets taxed at a set percentage. Sure, that means not receiving a tax refund, but that means not giving the government an interest-free loan.
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What does age have to do with income? Sure, under 18s are likely to have none but everyone else will have some kind of income, but it won't have anything to do with how old they are. Over 67 will have two or three income streams unless they didn't plan to retire.
Otherwise, I agree with you, I just don't see why age has anything to do with income.
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Just allow people to self-incorporate, so we, too, can use all the loopholes.
You can, basically. But you have to have enough money (or time and technical knowledge) to do so. Also most of the loopholes are more beneficial for large $ amounts.
If you can turn your home into a capital business investment and then rent it back to yourself at a loss, depreciate the house and write off the loss, etc...you still have to pay for the house but instead of being a cost item, it negates other income you have.
^^^ not tax advice, IANAA, and I entirely made it up for the purpose of discussion :)
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If you think taxes are theft, then feel free to stop using anything taxes pay for, including but not limited to:
Police
Fire departments
Ambulance service
Roads
Public utility infrastructure including water, sewer, power, telephone, internet
Television
Radio
Banking
Parks
Schools
etc.
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If you think taxes are theft, then feel free to stop using anything taxes pay for, including but not limited to:
Police
Fire departments
Paid by property tax, you have a point for this one.
Ambulance service
Fee-for-service, often covered/made less onerous by insurance. If the price is ridiculous, the reason is that insurance hides the cost from most people and insurance companies negotiate a much lower rate.
Roads
Gas tax, plus some toll roads. (and some states subsidize maintenance of other roads (and sometimes non-road expenses) with toll money)
Public utility infrastructure including water, sewer, power, telephone, internet
Usage-based fees, even if the owner is the city.
Television
Paid for by advertisers. Cable television is paid for by advertisers an
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Yeah, I forgot that there's absolutely no tax subsidy ever for ambulance service which often sits in the same fire houses as the fire trucks that you say I have a point for. Nor are there bond issues to pay for ambulance service above and beyond what property taxes pay for.
Also, I totally forgot that gax tax isn't a tax.
And I forgot that bond issues passed to fix 100-year old pipes and removing lead pipes aren't taxes, and that the federal government didn't just put a bunch of tax money into paying for exa
Free Tax USA seems to work (Score:2)
We need to start teaching kids in school how to recognize political advertising and ignore it. Fuck CRT, I want my kids (or I suppose my grandkids because I'm getting old) to be taught how to spot a Ted Cruz ad
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FreeTaxUSA is completely free for Federal e-file, regardless of complexity or income level. They even have Schedule C. For free.
You *can* pay about $23 to e-file state returns w/ unlimited amendments (federal and state) w/ priority support should you need to ask questions. I definitely recommend those two upgrades for painless e-filing if you can afford it.
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OLT.com has all that stuff too, lets everyone file federal taxes for free, and charges $9.95 for each state return you e-file or will let you print your state return for free. And they will also let you know when your returns are accepted for free. They do charge for some services, and provide a pricing schedule before you start filing.
I've used them twice now, SFSG. But I have simple taxes.
Re: Free Tax USA seems to work (Score:2)
Filing on paper is free.
Filing simple return is free from any number of filers.
You chose to pay $20 to not use paper forms, your choice, far from a requirement.
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Most of Europe is capitalistic but don't quite a few of those countries not require their citizens to really do much for year end taxes? I've read some just send you a form, if it's right you sign and return.
That would largely work here in good old corporate USA because all the corporations already send all this information to the IRS anyway. The worker shouldn't have to do that also.
Clearly though, companies like Intuit bribed our government officials and convinced them to ban the IRS from just hiring prog
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Why does the IRS not offer this? (Score:1)
The IRS processes billions, probably trillions of dollars annually. Why can they not take a wee little bit of that money and pay one company to make a proper free-file system that works for everyone, and also has an API where companies like Intuit, etc. can tie in. For people who use Intuit products for all their book-keeping, etc. it should be easy to submit taxes from their existing software. For people who don't, it should be easy to just go to the IRS site and do ones taxes (complete with all the imp
Re: Why does the IRS not offer this? (Score:2)
I don't want the IRS managing an online filing system, it's still too soon after the healthcare portal from 2010(?).
The IRS is going to get $83BN to hire 83K new irs agents, when given money, the irs chooses to increase enforcement, not simplify compliance...
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“The bureaucracy is expanding to meet the needs of the expanding bureaucracy.” - Oscar Wilde
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> when given money, the irs chooses to increase enforcement, not simplify compliance
That's because Congress passed a law (at the behest of companies like Intuit) explicitly prohibiting the IRS from implementing any process that might "unfairly" compete with private tax preparers.
It's positively absurd that we're required to independently collect and submit documentation that's automatically submitted to the IRS in bulk anyway, instead of being able to just download something like a .pdf document from the
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Why doesn't the IRS just have a web site? (Score:2)
Like most UK adults, I don't have to file a tax return, but my wife does as she is self employed. We don't have any tax software and don't see the need. She has a simple spreadsheet to work out her income and then she just logs into the UK tax authority (Inland Revenu
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The IRS was planning to make a free site, then Intuit lobbied them, saying that Intuit would provide simple filings for free if the IRS didn't horn into their business model. The IRS agreed and Intuit complied, but made it very difficult for consumers to find\use their promised free service.
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The article states that this software is only really free if your tax affairs are simple, but if they are simple then why do you need any tax software at all? Couldn't the IRS just have a web site where you enter the required information?
It's even worse than that. If one's taxes are simple then the IRS already knows everything it needs to know to calculate them, which is trivial. The instructions for doing it are literally on the form and in a booklet they publish (where the rate schedule is found, along with more detailed instructions which are hardly necessary.)
And they have a website, obviously. So we could just be going to the website, checking a box that says "I don't need to file any additional forms and that is still my current addre
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I love that last part the most. Increasing the IRS's auditing powers only screws the poor and middle class. It's so true because we don't have the means to fight it. Rich people have access to really good accountants and lawyers. Better ones then the IRS has. The amount of work it takes to get money our of the rich compared to how easy it is to fleece every day Joe is no joke.
If you can go beat up 50 million every day Dick and Harry for $10 more, I'll make a lot more then trying to go after the billionaires
USA is weird (Score:2)
I understand a paid tax software companies, specially big ones, because of the complexity, but why the hell the government doesn't have a free software for tax filling for individuals? In Brazil where I live the IRS equivalent has a piece of software for, I think, over 20 years freely available that allows anyone to properly file their taxes and is compatible with all platforms, windows, linux, mac and even solaris (at least in the past, don't know if solaris is still supported), it also has a simplified ve
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Yes, that's all very well and good but how do accountants, Intuit and the other tax software companies make money from that?
We have build entire industries on making lives difficult. Taxes, medical care, insurance litigation, criminal justice...the list goes on.
The crazy thing is these people could be functional contributors to society instead of profiting from things that shouldn't even exist.
IRS: FYPM
Taypayer: Ok, how much?
IRS: You have to use this crazy archaic paper form to guess
Taxpayer: Can I guess zero?
IRS: Ha! We already know what you owe. If you guess wrong we charge more and/or just send you to jail.
Or there's healt
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Yeah, buddy goes on about how silly this is. The IRS knows exactly what like 95% of the country owes in taxes, yet we have to go through this ridiculous rigmarole every fucking year.
Yay! (Score:2)
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Wow (Score:2)
Do games next! (Score:2)
Please? I'd love to see all the "free to play" games smacked down, and hard.
Imagine if we just paid something reasonable for a reasonable service?
p.s. Anyone paying turbotax is getting ripped off. Pay an *actual* accountant and the greater refund you're almost certain to get will more than cover their fee...plus the $ goes to a real person, not corporate profits.