Santa Clara Co. Accuses Intuit Of Deceptive Business Practices

MOUNTAIN VIEW, CA — Santa Clara County filed a lawsuit on behalf of California residents against Intuit on a complaint accusing the maker of the electronic tax preparation software TurboTax of deceiving taxpayers, the local government reported.

Santa Clara County Counsel James R. Williams contends low-income taxpayers entitled to free tax filing paid for expensive tax preparation products that Intuit promised would be free.

"Through predatory and deceptive actions, Intuit has made hundreds of millions of dollars in unfair profits on the backs of California taxpayers," Williams said. "This includes low-income families who paid Intuit for services that Intuit promised the IRS and the public it would offer for free. Many of the customers who were harmed by Intuit’s actions are vulnerable Santa Clara County residents struggling to make ends meet."

The company denies the allegations.

The lawsuit announced Friday alleges that Intuit intentionally and deceptively steered taxpayers to TurboTax and away from free alternatives, promising consumers they could file their taxes using TurboTax "for $0" or "free, free, free." But the promises of free filing were what the county's legal department characterizes as "a sham" for most people. Once these people were hooked, they were egregiously led to be believe they needed upgrades for the sake of "accuracy," the county explained.

Upon finding ways to in some respects hide the free or low-cost alternatives, Intuit funneled these taxpayers into costlier versions that resulting in the sacrifice of funds needed for necessities like rent, groceries and gas.

The lawsuit in Santa Clara County Superior Court is a civil law enforcement action brought under California’s False Advertising Law and seeks a court order requiring Intuit to pay restitution to the taxpayers it has unfairly charged for tax preparation services. The county is also insisting on civil penalty payments from Intuit to "discourage it from engaging in deception in the future."

Intuit contends it's committed to offering free tax preparation services as demonstrated by more people filing their taxes for free with TurboTax than all other tax prep software companies combined. According to the company, the total equate to 55 million filing for free over a five-year period.

Further, the firm insists it spent $1.5 million on nonprofit organizations geared to educating low-income taxpayers on how to file their returns including those who are considered candidates for free filing.

"Last tax season more people filed their taxes with TurboTax and paid absolutely nothing than in any year in company history. When Intuit has an opportunity to respond to these allegations in court, it will be shown that Intuit has at all times been clear and fair with its customers," company spokesman Rick Heineman told Patch.

More on its stance is listed on the company website.