A new class action lawsuit against TurboTax maker Intuit claims the tax service breached its agreement with the Internal Revenue Service by intentionally obscuring its free filing service and charging qualifying taxpayers anyway. 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 complaint was filed Sunday in a California district court on behalf of plaintiffs from three different states.
TurboTax’s free filing service is offered in partnership with the IRS and is meant to benefit 70 percent of U.S. taxpayers with adjusted gross incomes of $66,000 or less. In TurboTax’s case, the free filing service should be offered to those with adjusted gross incomes of $34,000 or less, per the IRS Free File Software page.
The lawsuit claims that TurboTax violated its agreement with the IRS by separating its free filing page from its primary service as well as by intentionally hiding the service from search engines by altering its code. Additionally, TurboTax is accused of using language meant to lead taxpayers to believe that its primary service is free only to later charge them.
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.