TOPLINE
The Federal Trade Commission is investigating Intuit over allegations it deliberately diverted eligible TurboTax users away from free filing options through deceptive marketing.
ASSOCIATED PRESS
KEY FACTS
The FTC has been investigating Intuit for more than a year, according to a court filing first reported by ProPublica on Tuesday.
The agency is probing whether Intuit broke the law by pushing customers eligible for the IRS Free File program into paid TurboTax services through misleading marketing.
The investigation comes after a series of reports from ProPublica found that Intuit and H&R Block hid its Free File service on Google search and used deceptive design in order to make the free option harder to find.
Intuit in July asked FTC commissioners to limit the scope of the investigation, claiming the agency asked for documents effectively expanding the probe into “a full-fledged audit of Intuit’s business practices, Intuit’s relationship with the IRS and even whether Intuit has ever sought or claimed a tax deduction for its charitable giving”—but a bipartisan order written by Commissioner Noah Phillips rejected the company’s request last month.
In a statement, Intuit spokesman Rick Heineman said that “TurboTax prominently and transparently discloses the price of its paid products and is at all times clear and fair with its customers.” The FTC did not immediately respond to a request for comment.
Key background
This isn’t the first investigation into the FreeFile program. The New York State Department of Financial Services released a report in July concluding that the for-profit tax industry “exploited” the Free File program to “drive their own profits at the expense of low-income taxpayers.” A Senate investigation confirmed that Intuit, H&R Block, TaxHawk, Drake and TaxSlayer excluded the Free File program from search engines. That investigation also found that the IRS conducted little oversight over the program.
Tangent
Tax companies have long agreed to offer the IRS Free File program, but in exchange, the IRS pledged not to create its own free tax filing system to compete with them, according to ProPublica. In general, the tax return preparation industry has opposed government efforts to make filing taxes easier, which would essentially decimate their business.