Hensley: What happens when it turns out that free doesn't mean free

You might remember a few months ago during the annual unofficial Super Bowl holiday that there seemed to be an abundance of Turbo Tax commercials, reminding the public of its approaching obligation as far as one’s taxes and the federal government.

Even if you managed to somehow miss them on that day when the Rams topped the Bengals, the ads were everywhere with the oft-repeated refrain “free, free, free,” intimating that using this particular software to file taxes could be done at no cost, depending on a variety of factors and quickly vanishing fine print at commercial’s end.

Uh, no.

Turns out, it wasn’t free, free, free, despite what we heard or how often we heard it. The Federal Trade Commission filed a lawsuit against Intuit, the software’s parent company, in March. After much back and forth with Intuit defending its business practices and the FTC disagreeing, a settlement was reached earlier this week that will preclude the case from going to court.

The upshot of this is Intuit agreed to pay $141 million in restitution to low-income Americans unfairly charged for services that should have been free, according to a report from CNBC. That means approximately 4.4 million people who used Turbo Tax Free Edition software between 2016 and 2018 will get roughly $30 for each year they paid for services.

Additionally, the company said it would reform its practices, meaning we can wave goodbye to the “free, free, free” campaign. The company admitted no wrongdoing as part of a settlement with attorneys general from all 50 states and the District of Columbia. Intuit also expects minimal impact to its business, according to a statement issued by company officials.

“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,” Kerry McLean, the company’s vice president and general counsel, said in the statement. “Intuit is clear and fair with its customers, including with the nearly 100 million Americans who filed their taxes free of charge over the last eight years.”

Of course, not everyone saw it that way.

“Intuit cheated millions of low-income Americans out of free tax filing services they were entitled to,” New York Attorney General Letitia James said in a statement. “For years, Intuit misled the most vulnerable among us to make a profit. Today, every state in the nation is holding Intuit accountable for scamming millions of taxpayers, and we’re putting millions of dollars back in the pockets of impacted Americans.”

According to published reports, Intuit offered two free versions of the Turbo Tax software until recently. One was through the Internal Revenue Service Free File Program intended to help low-income Americans file for free, but Intuit left that program last July. Then it began pushing another version, Turbo Tax Free Edition, as, you guessed it, “free, free, free” for those filing “simple” returns.

If you weren’t filing an Intuit-defined simple return, you had to upgrade to the paid version, even though they may have qualified for the free program. For the 2021 tax year, Intuit said a simple return as “one that can be filed on a Form 1040 with limited attached schedules, like the one that includes student loan interest paid, according to the FTC.

Filing tax returns is stressful business for almost everyone, and people tend to rely on what they hear and see as being truthful and helpful. The reasoning goes, if it’s on television, it’s gotta be true (with the possible exception of cable news shows). As the incessant Turbo Tax commercials flooded the airwaves, people hearing the message would certainly have been attracted to the word free and acted accordingly. The attorneys general said the company engaged in deceptive and unfair marketing, advertising and sales of online tax preparation, according to the agreement.

As an example, they alleged that Intuit hid its landing page for its IRS Free File Program from search engines during the peak of the 2018 tax season. They also said the Turbo Tax home page misled people into believing they qualified for the free service while not mentioning the Free File options, which kept consumers in the dark. For its part, the company pointed out it delivered an industry-leading 17 million plus free tax filings.

“Intuit believes individuals should be at the center of their finances so we are focused on financial empowerment for consumers to ensure individuals and families get every dollar they earned and deserve at tax time, regardless of if they are filing their taxes free of charge,” McLean said in the statement.

Intuit disputes the unflattering characterization of its marketing practices, and the company representative insisted it was ready to go to court and argue the case. Obviously, any time you get in front of a jury and appear to be an unsympathetic entity (as most involved in the collection of taxes tend to be seen), it’s a roll of the dice, and who knows what can happen. Equally uncertain is the speed with which the wheels of justice roll, meaning the case could have been hanging out there over the company’s head with no resolution for the foreseeable future.

Intuit’s leaders probably considered all of the options and thought $141 million and no admission of guilt was a pretty square deal to get all of this resolved and do so well in advance of the next tax season, when it might be possible a lot of folks will be paying a little more for Turbo Tax software.

Say what you want about letting buyers beware and if it sounds too good to be true, it probably is, but the most unfortunate aspect of this case is its impact on vulnerable, low-income people. Sometimes, caution will only go so far because one’s resources are limited or nonexistent.

Free really should mean free without a whole bunch of fine print, especially if we have to hear it so often.

Doug Hensley is associate regional editor and director of commentary for the Avalanche-Journal.

This article originally appeared on Lubbock Avalanche-Journal: Doug Hensley what happens when it turns out that free doesn't mean free