TurboTax’s $ 141 million settlement: who has the right to demand money and why

This story is part Taxes 2022CNET’s coverage of the best tax software and everything else you need to file a return quickly, accurately and on time.

TurboTax’s parent company, Intuit, has agreed to pay $ 141 million in damages after the Federal Trade Commission filed a lawsuit it is alleged that millions of customers were tricked into paying for tax preparation services that were supposed to be free.

The FTC states that in 2020 alone, two-thirds of eligible applicants could not use the TurboTax Free Edition, including gig workers and people earning income on the farm. Investigators said Intuit was also involved in deceptive marketing and trading practices, including intentionally blocking the IRS Free File landing page in search engine results.

The company also lured people with advertisements advertising its free edition, “just to get them to pay,” according to New York State Attorney Letitii James, who mediated the multi-state settlement.

“For years, Intuit has been fooling the most vulnerable among us to make a profit,” James said in a May 4 statement. “This agreement should serve as a reminder to large and small companies that participating in these deceptive marketing tricks is illegal.”

In a statement, Intuit admitted it had done nothing and said it had agreed to an agreement to “leave this issue behind”.

Find out below how much affected customers can expect to benefit from the settlement and whether you qualify.

Who is eligible for the TurboTax settlement?

Intuit provides refunds for nearly 4.4 million people in all 50 states who used TurboTax’s free edition between the 2016 and 2018 tax years.

These people were told they had to pay to apply, even though they qualified for the IRS Free File, a partnership between the agency and large tax preparation software companies. Individuals and families with an adjusted gross income of less than $ 73,000 are usually eligible for the Free File program, as are members of the military.

How can I find out if I qualify?

According to Halimah Elmariah, a spokesman for the New York State Attorney’s Office, nothing needs to be done. Eligible TurboTax users will receive a notification, either by email or letter.

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Affected clients will receive approximately $ 30 for each year they have been tricked into paying for archiving services.

Naomi Antonino / CNET

How can I apply for a settlement with TurboTax?

If you qualify, you will automatically receive a direct payment of approximately $ 30 for each year you have been tricked into paying for archiving services, according to James’ office.

The checks will come from a $ 141 million settlement, minus $ 2.5 million in administrative costs.

When will I receive the payment?

Because the settlement involves multiple states, payments will be made through a third-party administrator. The exact time frame has not yet been determined, but Elmariah told CNET she expects checks to be sent in the next few months.

For more, check out how to protect your money Zelle fraud and what to do if yours the tax refund has not arrived. If you missed the tax deadline this year, here’s what you need to do next.

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