Intuit defends practices amid claims it hid free-filing options from low-income taxpayers

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Intuit – the parent company of TurboTax – is standing behind a video message its CEO sent to employees explaining its decision to direct taxpayers toward educational content instead of free-filing options.

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Intuit CEO Sasan Goodarzi sent an 11-minute video to workers saying the company was trying to help its customers by prioritizing educational content in search, as first reported by ProPublica.

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“Our choice around search was intended to be the best interest of taxpayers so they were more fully informed about their options and could choose what they felt was best for them,” Goodarzi said.

An initial report from ProPublica claimed that Intuit tricked taxpayers into paying for services by hiding the free-service options from Google searches and misleading advertising. It reportedly did that by adding code on its site telling search engines not to list its TurboTax Free File in search results.

Individuals with incomes of $66,000 or less are eligible to file for free through the IRS’ free file program – a partnership with third-party preparers. While 70 percent of Americans are eligible to file through the program, only 2.5 percent did so in fiscal 2018 – which some have attributed to the companies’ deliberate efforts to hide the products.

Intuit said it stands behind the video as a “clear description of our actions as being both appropriate and consistent with our values.”

“Our CEO’s video message is part of our commitment to an ongoing dialogue with our 9,000 employees and reflects our culture of transparency,” a spokesperson for the company said.

Goodarzi said after the “misinterpretation” of Intuit’s “well-intended” actions, it was removing limitations it had put in place.

The IRS said on Wednesday it would bring in an outside contractor to review the Free File program, following a request from a group of senators asking it to do so.

Meanwhile, Los Angeles City Attorney Mike Feuer filed a lawsuit against Intuit and H&R Block earlier this month amid mounting the claims the major U.S. preparers hid options for low-income individuals to use free-filing services to prepare their tax returns.

In a statement at the time, a spokesperson for Intuit said suggestions it does not support the IRS Free File program are "flat wrong."

H&R Block said it is "proud to have helped millions of Americans with our four free tax-filing options, including the IRS Free File program."

New York’s Democratic Gov. Andrew Cuomo called for an investigation into the same “deceptive” practices earlier this month.

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There is a burgeoning battle between private tax preparation companies and lawmakers, as legislation advances through Congress that would continue to prevent the IRS from creating its own filing software. A growing number of lawmakers, including New York Rep. Alexandria Ocasio-Cortez and Massachusetts Democrat Sen. Elizabeth Warren, have voiced support for a system where the IRS is able to play a larger role in the tax preparation process.