Illinois residents "deceived into paying for tax services that were available for free" will soon begin receiving checks as part of a nationwide, multistate settlement with TurboTax owner Intuit Inc., Illinois Attorney General Kwame Raoul announced this week.
The company behind the TurboTax tax-filing program had earlier agreed to pay $141 million to customers across the United States, including in Illinois, over the allegations, officials announced.
Under the terms of a settlement signed by the attorneys general of all 50 states, Mountain View, California-based Intuit Inc. will suspend TurboTax’s “free, free, free” ad campaign and pay restitution to nearly 4.4 million taxpayers.
“Intuit deceived customers into paying for their products while attempting to diminish free tax services available through the federal government,” Raoul said. “I am pleased that consumers will start to receive checks under the settlement, which holds Intuit accountable for intentionally deceiving taxpayers simply to increase sales of their products.”
Here's what to know:
Who will be receiving checks and when?
Under the agreement, Intuit will provide restitution to consumers who started using the commercial TurboTax Free Edition for tax years 2016 through 2018 and were told that they had to pay to file even though they were eligible for the version of TurboTax offered as part of the IRS Free File program.
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In Illinois, nearly 134,000 TurboTax customers can expect to receive settlement checks, according to the company.
Raoul said eligible customers "will be notified by email by the settlement fund administrator, Rust Consulting." Those customers are slated to receive their checks in the mail "automatically without having to file a claim."
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Checks are set to start going out in the mail on May 8, Raoul said.
How much will the settlement checks be for?
Consumers are expected to receive a direct payment of approximately $30 for each year that they were deceived into paying for filing services.
The amount each consumer receives will be based on the number of years in which they qualified.
"Most consumers are expected to receive between $29 and $30," a notice on the settlement website reads.
What was the TurboTax settlement about?
NBC 5 Responds has been reporting on the settlement for months.
Until last year, Intuit offered two free versions of TurboTax. One was through its participation in the Internal Revenue Service's Free File Program, geared toward taxpayers earning roughly $34,000 and members of the military. Intuit withdrew from the program in July 2021, saying in a blog post that the company could provide more benefits without the program's limitations.
The company also offers a commercial product called “TurboTax Free Edition” that is only for taxpayers with “simple returns,” as defined by Intuit.
Officials said the investigation into Intuit was sparked by a 2019 ProPublica report that found the company was using deceptive tactics to steer low-income tax filers away from the federally supported free services for which they qualified — and toward its own commercial products, instead.
According to documents obtained by ProPublica, Intuit executives knew they were deceiving customers by advertising free services that were not in fact free to everyone.
“The website lists Free, Free, Free and the customers are assuming their return will be free,” an internal company PowerPoint presentation said. “Customers are getting upset.”
Intuit admitted no wrongdoing as part of the settlement agreement and said it agreed to pay $141 million "to put this matter behind."
