TurboTax, H&R Block Hid Free Tax Filing Option, Lawsuits Claim

The People of the State of California have filed lawsuits against Intuit (the makers of TurboTax) and H&R Block, accusing the companies of hiding their free tax filing options, leading many people to pay to file their taxes.

This issue has led lawmakers, including Senators Elizabeth Warren and Bernie Sanders, to request that the Internal Revenue Service and the Federal Trade Commission investigate the tax software providers in question.

Reportedly tax companies including H&R Block and Intuit made an agreement with the IRS to offer a “Free File” program that allowed people making less than $66,000 per year to file for free.

This program was made in exchange for the IRS agreeing not to create its own tax preparation service, which would result in the private tax preparation services losing revenue.

This agreement reportedly began in 2002, and has been renewed through Oct. 21, 2021.

However, the tax prep class action lawsuit alleges that Intuit and H&R Block have not held up their end of the bargain, by making these free options virtually inaccessible to many consumers, which means that these consumers end up paying for tax filing services.

Allegedly, only three percent of taxpayers use Free File options provided by the companies, which means that only 3 million of the 100 million eligible tax payers are taking advantage of the service.

Representatives for the People of the State of California say that “we allege that’s no accident. Both Intuit and H&R Block have created impediments to the IRS system.”

The Los Angeles Times reports that these companies conceal the IRS’ Free File program on their websites, and instead direct consumers to their own free program.

Allegedly, these programs are watered-down versions of the free tax software and are often not free — in some case they reportedly cost as much as $120. H&R Block’s version in particular, costs as much as $105, according to the tax prep class action lawsuit.

Reportedly, the free programs offered to customers in place of the government’s Free File program charge for state filing and are largely unusable by independent contractors and people who have itemized deductions.

Allegedly, these companies further lure people away from Free File by trying to sell customers software upgrades as they file their taxes, if the free services are insufficient.

ProPublica reports that Intuit went so far as to hide the Free File web page on its site from search engines, which prevented consumers from finding it when they searched for the program on Google. Reportedly, Intuit did change this after ProPublica published its report on the issue.

The People of the State of California are represented by Michael N. Feuer, City Attorney; James P. Clark, Chief Deputy City Attorney; Michael J. Bostrom, Assistant City Attorney; Connie K. Chan, Deputy City Attorney; and Adam R. Teitelbaum, Deputy City Attorney, from the Office of the Los Angeles City Attorney Affirmative Litigation Division.

The Intuit Free File Concealment Class Action Lawsuit is The People of the State of California v. Intuit Inc., Case No. 19STCV15644, in the Superior Court of the State of California, County of Los Angeles.

The H&R Block Tax Filing Concealment Class Action Lawsuit is The People of the State of California v. H&R Block Inc., et al., Case No. unknown, in the Superior Court of the State of California, County of Los Angeles.

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