People could file their tax returns online for free for a long time. Millions of customers paid hidden fees after signing up.
The Attorney General of New York led the multistate investigation. Ms. James said on Wednesday that the company that created the software would pay back more than four million Americans who were wrongly charged for tax services that were advertised as free. The refunds will be sent to the taxpayers.
The company cheated millions of low-income Americans out of free tax filing services they were entitled to, according to Ms. James.
The settlement requires Intuit to stop misrepresenting its tax products. The company said in a statement that it did not admit any wrongdoing and that it would pay the settlement fee.
The company deceived customers who were eligible for free tax services and instead diverted them to enroll in paid versions, according to a multistate investigation led by Ms. James.
According to Ms. James' office, one out of every three taxpayers in the United States qualified for the company's commercial product. The product was free for some taxpayers who had simple returns.
Low income people and members of the military were allowed to file their taxes through TurboTax at no charge, thanks to the partnership between the Free File Program and Intuit.
Several deceptive and unfair trade practices were employed by the company to drive customers away from the federal program. Buying search advertisements and blocking the free file landing page from appearing in search engine results were some of the methods used.
The federal tax filing partnership program with the I.R.S. would be leaving in July 2021.
More than four million customers who were eligible for the I.R.S. Free File program will be affected by the settlement. Each year, customers will receive a check for roughly $30 for being forced to pay for TurboTax.
Texas had the highest number of consumers who were misled and unfairly charged, according to preliminary estimates from the settlement document. The numbers are subject to change, according to Halimah Elmariah.
In its statement, Intuit said that it already complies with most of the advertising practices required in the settlement and that it expects minimal impact to its business from implementing the remaining changes going forward.
40 million taxpayers are expected to be helped in filing their taxes for free over the next three years.
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