TurboTax Begins Sending Checks To 4.4M Customers Under $141M Settlement

TurboTax has begun sending checks to nearly 4.4 million low-income people across the country who were reportedly deceived by the company into paying for tax services that essentially should have been free.

The checks are part of a $141 million settlement that was reached between TurboTax's parent company Intuit and all 50 states and the District of Columbia in May last year, CNN reported.

The tax software company "tricked" millions of Americans into paying for free tax-filing services to TurboTax between 2016 and 2018, New York Attorney General Letitia James said in a press release that came out on May 4.

"TurboTax's predatory and deceptive marketing cheated millions of low-income Americans who were trying to fulfill their legal duties to file their taxes," James added. "Today we are righting that wrong and putting money back into the pockets of hardworking taxpayers who should have never paid to file their taxes."

As part of the settlement, affected people will receive an email explaining the process and eventually checks that will be mailed throughout this month, according to Kiplinger. Most TurboTax customers are expected to receive about $30, while some may get up to $85 for using the software's services for three consecutive years.

"Eligible consumers include those who paid to file their federal tax returns through TurboTax for tax years 2016, 2017 and 2018, but were eligible to file for free through the IRS Free File Program," the press release noted. "The amount each consumer receives will be based on the number of tax years for which they qualify."

While announcing the settlement last year, the Attorney General said Intuit "unfairly charged" people. James pointed out that her investigation into Intuit's practices was triggered by a 2019 ProPublica report accusing the company of using deceptive tactics to steer low-income tax filers away from federally supported free tax filing methods toward its own paid version.

"By requiring consumers to pay for tax return services that should have been available for free, Intuit cheated taxpayers out of their hard-earned money," Pennsylvania Attorney General Michelle Henry said in a press release about the legal settlement.

Meanwhile, Intuit admitted "no wrongdoing" as part of the agreement while agreeing to suspend TurboTax's "free, free, free" ad campaign. During its research, ProPublica obtained documents indicating that Intuit executives were aware of the consequences of advertising free tax filing services that weren't actually free for filers.

Kerry McLean, Intuit's executive vice president and general counsel, reportedly welcomed the agreement reached with the state attorneys general.

"Intuit is pleased to have reached a resolution with the state attorneys general that will ensure the company can return our focus to providing vital services to American taxpayers today and in the future," McLean said at the time.