This story is part of Taxes 2022, CNET's coverage of the best tax software and everything else you need to get your return filed quickly, accurately and on-time.
Intuit, owner of the tax-filing software TurboTax, has agreed to a $141 million settlement in the wake of a Federal Trade Commission complaint that it deceived millions of Americans into paying for online tax-return services that should have been free.
In July 2021, Intuit withdrew from the IRS' Free File Alliance to launch TurboTax Free Edition, which it said customers with "simple tax returns" that used IRS Form 1040 could use for no charge.
In March, the FTC sued Intuit, alleging that, in 2020 alone, two thirds of eligible filers couldn't use TurboTax Free Edition, including gig workers and people who earned farm income. Investigators said Intuit also engaged in deceptive marketing and trade practices, intentionally blocking its IRS Free File landing page from search engine results. The company also lured people in with ads that touted its free edition "only to deceive them into paying," according to New York Attorney General Letitia James, who brokered the multistate settlement.
"For years, Intuit misled the most vulnerable among us to make a profit," James said in a May 4 statement. "This agreement should serve as a reminder to companies large and small that engaging in these deceptive marketing ploys is illegal."
As part of the settlement, Intuit has agreed to suspend TurboTax's "Free, free, free" ad campaign, to better inform its users if they qualify to file for free and to enhance disclosures in its advertising.
In a statement, Intuit admitted no wrongdoing and said it agreed to the deal to "put this matter behind it."
Who qualifies for the TurboTax settlement?
Intuit will provide restitution to nearly 4.4 million people in all 50 states who used TurboTax's Free Edition between tax years 2016 and 2018.
These people were told they had to pay to file, even though they qualified for the IRS Free File program, a partnership between the agency and major tax prep software companies. Individuals and families with an adjusted gross income of less than $73,000 are typically eligible for the Free File program, as are members of the military.
How do I find out if I qualify?
No action needs to be taken, according to Halimah Elmariah, a spokesperson for the New York State Attorney's Office. Eligible TurboTax users will receive notification, either in an email or letter.
How do I file a settlement claim with TurboTax?
According to James' office, people who qualify will automatically receive a direct payment of approximately $30 for each year that they were deceived into paying for filing services. The checks will come from the $141 million settlement, minus $2.5 million in administrative costs.
When will I receive my payment?
Because the settlement involves multiple states, the payments will be handled through a third-party administrator, Elmariah told CNET. An exact timeline hasn't been determined yet, but she said she expects checks would be sent out in the next few months.
How to Claim Your Part of the $141 Million TurboTax Settlement - CNET
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