Intuit, the company which makes TurboTax, has agreed to a $141 million settlement with all 50 states. The settlement stems from allegations that the popular self-filing tax software steered customers away from its free edition software and pushed them toward its paid services instead.

Along with paying back millions of dollars in restitution to its users, TurboTax has agreed to suspend its ad campaign that touted “free, free, free!” The ad campaign helped pull in customers who were seeking free tax services but were then lured into paying for services they did not need.

As part of the settlement, TurboTax has agreed to pay back its customers and also has stated that there was no wrongdoing on their part.

Much like the federal government's Free File tool, TurboTax offers a free version of its tax filing services to those with “simple” taxes called TurboTax Free Edition. This free version is available to filers who have an income of less than $39,000 and active duty service members who have an income of less than $72,000. In an agreement with the IRS, self-filing software preparers including Intuit’s TurboTax can offer their free services through the federal government’s Free File program. Intuit was part of the program but then dropped out in 2020.

Following the investigation into the allegations against TurboTax, officials found that TurboTax abused this free file option by using deceptive advertising practices to pull tax filers in with the promise of free filing but then steer them toward using their paid services.

Typically, customers who use the Free File feature will often be routed to the Irs.gov website to start their return. Instead, TurboTax routed consumers to its website. TurboTax is accused of using deceptive methods including buying up advertisements space online to pull customers to its website instead of the Free File federal program provided by the IRS.

Letitia James, New York Attorney General, announced the settlement and shared, "Intuit cheated millions of low-income Americans out of free tax filing services they were entitled to. For years, Intuit misled the most vulnerable among us to make a profit. Today, every state in the nation is holding Intuit accountable for scamming millions of taxpayers, and we're putting millions of dollars back into the pockets of impacted Americans."

Following the settlement, Intuit shared a statement that detailed, “Intuit is clear and fair with its customers, including with the nearly 100 million Americans who filed their taxes free of charge with our products over the last 8 years — more than all other tax prep software companies combined. In coming to a resolution on this matter, we admitted no wrongdoing and are pleased to be able to continue our strong partnership with governments to best serve the needs of taxpayers across the country.”

Individuals who used TurboTax between 2016 and 2018 to file their taxes will be eligible for the $30 refund, with a payment issued for each year they used TurboTax. No action has to be taken on the part of those impacted as the payment will be sent out automatically. An estimated 4.4 million customers can expect to receive a payout following this settlement.