Class-action lawsuit filed against owner of TurboTax

Class-action lawsuit filed against owner of TurboTax
© Getty Images

A class-action lawsuit was filed Sunday against TurboTax owner Intuit, alleging that the company breached an agreement with the IRS by diverting taxpayers away from its free-filing program.

“The victims of this scheme were intentionally misled and deprived of the opportunity to make an informed decision about their tax-filing service,” Eric Gibbs of Gibbs Law Group LLP, one of the lawyers representing the plaintiffs, said in a statement.

ADVERTISEMENT

The law firms that filed the complaint said their case is the first nationwide class-action suit filed against Intuit over the free-filing issue.

The lawsuit, filed in federal court in California, is the latest example of legal action being pursued against tax-preparation companies for allegedly hiding their free options. Last week the Los Angeles city attorney filed lawsuits against Intuit and H&R Block.

The IRS is also reviewing concerns about the free file program, and New York Gov. Andrew Cuomo (D) has called on agencies in his state to investigate the tax-preparation companies.

The IRS has a partnership with Intuit and other tax-prep companies, known as "Free File," under which the companies offer free online tax filing services to low- and middle-income taxpayers. The investigative news outlet ProPublica has published a series of articles in recent weeks finding that TurboTax and others have taken steps to hide their options under the free-file program, such as by hiding their free options from web search results, prompting concerns from members of Congress and state and local officials.

The new class-action lawsuit alleges that Intuit breached its agreement with the IRS under the free-file program, and violated various business, consumer protection and unfair competition laws in California, New York and Pennsylvania.

The three named plaintiffs in the lawsuit all had adjusted gross income of less than $34,000 in 2018 and were told by TurboTax that they were required to pay the company money after preparing their taxes using a purportedly free option, according to the complaint.

The plaintiffs are seeking certification of nationwide class of U.S. taxpayers who were eligible to use TurboTax's free-file option but were charged money by the company, as well as subclasses for New York and Pennsylvania residents.

When asked for comment, an Intuit spokesman told The Hill that the company doesn't comment on pending litigation.