TurboTax Class Action Says Free Filing Hid From Military Members

A Marine Corps Reserve member has hit TurboTax with a class action lawsuit alleging that the tax prep company makes members of the military pay for its services when they qualify for free filing.

Plaintiff Laura Nichols claims in the TurboTax class action lawsuit that the company, owned by Intuit, deliberately diverts military personnel away from free tax filing options.

Nichols says TurboTax takes advantage of service members in order to generate “ill-gotten gains from persons who can least afford it.”

According to the Intuit class action, TurboTax made an agreement with the Internal Revenue Service to offer 70 percent of taxpayers a free filing service. However, blog posts by the tax prep company reportedly direct military members away from the free filing service.

“TurboTax also marketed its paid offerings as ‘Free Guaranteed’—so that qualified military personnel believed they were filing their taxes pursuant to the free-filing program, only to be hit with unexpected charges after they already spent hours entering information and were getting ready to file,” claims the TurboTax class action lawsuit.

“Indeed, TurboTax’s website and blog posts directed to military members failed to even mention that the IRS Free Filing Program or provide a link to TurboTax’s actual free filing product.”

As such, alleges the Intuit class action lawsuit, TurboTax violated its agreement with the IRS and took advantage of military personnel.

According to the TurboTax class action, nearly 100 million Americans qualify for free tax filing services under a 2004 agreement made between the IRS and TurboTax. A subset of this group includes those in the military who make a gross income of $66,000 or less.

However, “while 70% of U.S. taxpayers are eligible to file for free, less than 2.5% of eligible taxpayers actually utilize the program,” points out the Intuit class action lawsuit.

“The reason for this stark discrepancy is due in no small part to an array of deceptive practices employed by TurboTax (and its competitors) to prevent lower-income taxpayers from utilizing the program in favor of its paid product offerings.”

In addition to the misleading blog posts targeting members of the military, the plaintiff says TurboTax deceptively titles its military free filing program.

“TurboTax’s actual free product is referred to as TurboTax ‘Freedom Edition’ – which enables users eligible to complete and e-file their federal tax returns for free in accordance with the IRS Free File program, no matter how many state or federal forms are required to file,” points out the TurboTax class action lawsuit.

“Yet – and as but one example of TurboTax’s deceptive practices – TurboTax also offers a different ‘free’ online tax product bearing a similar name: TurboTax ‘Free Edition.’”

In fact, according to the Intuit class action, users cannot even access the true TurboTax free filing program, also known as the “Freedom Edition,” from the company’s regular website.

This is not the first class action to hit TurboTax’s parent company, Intuit. The company also faces a class action lawsuit in California alleging TurboTax diverts users away from the free service, hitting them with hundreds of dollars in charges at the end of their sessions.

Nichols is represented by Eric H. Gibbs and Aaron Blumenthal of Gibbs Law Group LLP, and Norman E. Siegel, J. Austin Moore and Jillian R. Dent of Stueve Siegel Hanson LLP.

The TurboTax Class Action Lawsuit is Nichols v. Intuit Inc., Case No. 3:19-cv-02666-CRB, in the U.S. District Court for the Northern District of California.

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