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Tax season is just around the corner, and many consumers will turn to Intuit’s popular TurboTax software to prepare and file their own taxes. A federal class action lawsuit filed in California may have these consumers thinking twice, however, claiming Intuit charges users for its so-called “free” online edition of TurboTax, and charges illegal and exorbitant fees to those who elect to defer their TurboTax fees to be taken out of their tax refund.According to the TurboTax class action lawsuit, customers visiting the TurboTax webpage are presented with various TurboTax Online products, including the “Free Edition.”
However, “the poorly named TurboTax Online ‘Free Edition’ is not free, for it requires additional fees (typically $19.95) to file a state return. According to Defendant’s website, ‘TurboTax Online is free until you decide to file, e-file or print your return.’ At that point, consumers must ‘purchase [the] TurboTax Online federal and state products,’” the TurboTax class action lawsuit states.
While Intuit prominently displays and aggressively markets its not-free “Free Edition,” it conceals from plain view what it calls its “Freedom Edition,” which provides actual free e-filing for both federal and state tax returns, the class action lawsuit says.
The TurboTax class action lawsuit also claims Intuit violates the Truth in Lending Act and California business and usury laws by charging “usurious,” “quadruple-digit interest rates” as fees for deferring payment to be taken out of users’ tax refunds. The class action lawsuit also claims Intuit violates federal and California law by not accurately disclosing the interest rates and finance charges for deferring payment of tax preparation fees.
For example, lead Plaintiffs Tasha and Fredierick Smith claim in the class action lawsuit that they used TurboTax’s online software in 2009, 2010 and 2011. Each time they deferred paying the $89.90 fee to use the software, and chose to have it deducted from their tax refund.
Intuit charged them another $29.95 to do this, more than 34 percent of the $89.90 fee, the Smiths claim. They received their refund from the IRS two weeks later, which means they “paid $29.95 for an approximate 14-day loan of $89.90,” the class action lawsuit states.
“The APR, properly calculated in accordance with TILA, was an exorbitant quadruple-digit interest rate. Such interest rates also violate California’s usury laws.”
The Intuit class action lawsuit is brought on behalf of all U.S. citizens who, after January 12, 2008, used TurboTax Online and received a Refund Processing Option payment facilitated by Intuit and Intuit’s fees were deducted from the deposit account established for the Refund Processing Option payment. It is seeking statutory damages, restitution, compensatory and treble damages, and injunctive relief.
A copy of the Intuit TurboTax Class Action Lawsuit can be read here.
The case is Smith v. Intuit, Inc., Case No. 12-cv-00222, U.S. District Court, Northern District of California.
UPDATE 1: A class action settlement has been reached! Learn how to file a claim for the Intuit TurboTax Class Action Lawsuit Settlement.
UPDATE 2: A federal judge granted final approval to the Intuit TurboTax Class Action Lawsuit Settlement on October 1, 2013.
Update 4/24/14: Some Top Class Actions viewers have reported they received the following update from Heffler Claims Group, the Settlement Administrator for the TurboTax class action settlement: “We are currently in the process of reviewing over 360,000 filed claims. Your patience during this process is appreciated. Checks will be mailed out upon completion of the claims review process.The amount that each claim will receive via the settlement fund has not yet been determined. This determination usually occurs once all claims have been finalized.At this time, we have no set date for fund disbursement, but we are anticipating checks to go out soon after the claims review process is completed. Please feel free to get back to us in the future.” More info: www.turbotaxclassaction.com
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103 thoughts onIntuit TurboTax Class Action Lawsuit
I have filied from 2008-2013 with no problems. I usually mail and file my own state so why does it still charge if its free…I dont upgrade to anything and you still have to pay…thats for the person that called people dump dump…please explain that…its a fraud whats free suppose to be free even if you did get your refund ontime and correct…thanx..
I filed for the last 10 years.
I filed and had to 29.95
Have filed with TurboTax for the last 3-4 yrs, haven’t had a problem getting my tax refund or issues with IRS but always get charge $30-$50 for the “free” edition to file my taxes
JES2O56 sign me up
I filed for 3yrs and had no problems with IRS until now. Now i have an audit from them and had to prove my kids where staying with me etc. Now irs says i owe over 700.00 and im still fighting to get my money.
TurboTax miss caculated my refund for 2011 year and now IRS is after me. Not fair at all and I dont agree with paying out of ny pocket for TurboTax major error. Any opinions???Or did the same thing happened to anyone else???
I woupd like to file a class action lawsuit!!!! Against turbo tax!!!!is anyone with me I am looking for suitors please!!!! Lets get this money we deserve and then some call me at 2163708324
Was charged when using free edition of Turbo Tax
Was charged by turbo tax when using free edition was unable to back out without losing tax info.