TurboTax Class Action Says Intuit Hid Free Filing Option

UPDATE: On Dec. 17, 2020, a federal judge rejected a proposed $40 million settlement between Intuit, the company behind TurboTax, and a Class of consumers suing the company for allegedly directing them away from the TurboTax free edition even though they were eligible to use it.

Intuit faces a class action lawsuit from California consumers claiming that the company hid their free filing options from TurboTax customers.

According to the recent class action lawsuit, Intuit is part of a group called the Free File Alliance.

This group reportedly provides free online tax filing options to the lowest 70 percent of all taxpayers in America.

According to the IRS, around 100 million individuals qualify for free filing through the Free File Alliance but only three percent of these individuals have used the valuable resource.

Recent TurboTax class action claims against Intuit say the company intentionally diverts TurboTax customers from the Free File Alliance option and instead pushes customers to purchase their paid filing services.

“The victims of this scheme were intentionally misled and deprived of the opportunity to make an informed decision about their tax­-filing service,” a class attorney said in a press release.

Plaintiff Brianna Sinohui reportedly earned less than $34,000 in 2018 and qualified for the Free File Alliance filing option. However, when she filed her taxes through TurboTax, she was allegedly charged $179.

Michelle Arena, another plaintiff in the TurboTax class action lawsuit, was reportedly charged $86 to file her taxes despite making only $22,000 in 2018.

Sinohui and Arena claim that they were wrongfully misled about free filing options through TurboTax which caused them to sustain financial damages in the form of filing fees. Their complaint seeks “substantial” damages but does not specify an exact amount.

The plaintiffs seek to represent a Class of TurboTax users around the United States who qualified for the Free File Alliance option but were charged fees by Intuit for the filing of their returns.

In addition to criticizing the misdirection allegedly perpetuated by Intuit, the class action rejects language in TurboTax’s terms of service that forces customers to resolve grievances through arbitration rather than a formal lawsuit or class action lawsuit.

According to the TurboTax customers, the wide number of individuals involved in the alleged scheme makes a class action lawsuit appropriate.

Class counsel for the plaintiffs similarly calls on TurboTax to stop the use of arbitration agreements.

“Given the significant number of low-­income taxpayers who were affected by TurboTax’s conduct, we call upon TurboTax to join tech companies like Google, Facebook and Apple and disclaim the use of forced arbitration in customer contracts affecting our country’s most vulnerable citizens,” said a class attorney in a press release.

The People of the State of California have filed similar lawsuits against both Intuit and H&R Block. Like Sinohui, the People of the State of California claim that these tax companies hid their free filing options from consumers in order to maximize their profits.

The tax prep consumers are represented by Eric Gibbs of Gibbs Law Group LLP and Norman Siegel of Stueve Siegel Hanson LLP.

The TurboTax Free Filing Class Action Lawsuit is Sinohui, et al. v. Intuit Inc., Case No. 5:19­-cv-­02546, in the U.S. District Court for the Northern District of California.

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