FTC Bans TurboTax From Advertising 'Free' Services, Calls It Deceptive (cnn.com) 84
The Federal Trade Commission ruled in a final order and opinion Monday that TurboTax, the popular tax filing software, engaged in deceptive advertising and banned the company from advertising its services for free unless it is free for all customers. CNN adds: By running ads for "free" tax services that many customers were not qualified for, the tax filing software violated the FTC Act and deceived consumers, the agency said. The FTC had first sued Intuit, TurboTax's owner, for its deceptive advertising in 2022. The FTC staff alleged most tax filers couldn't use the company's "free" services -- "such as those who get a 1099 form for work in the gig economy, or those who earn farm income." TurboTax advertising their products as free misled those customers, according to the FTC.
The FTC Administrative Law Judge D. Michael Chappell announced the initial decision in September, which the commission upheld Monday. Intuit had appealed to the FTC as part of the process. In a statement Monday, Intuit said it has appealed "this deeply flawed decision" to federal circuit court outside of the FTC. "Absolutely no one should be surprised that FTC Commissioners -- employees of the FTC -- ruled in favor of the FTC as they have done in every appeal for the last two decades. This decision is the result of a biased and broken system where the Commission serves as accuser, judge, jury, and then appellate judge all in the same case," an an Intuit spokesperson said.
The FTC Administrative Law Judge D. Michael Chappell announced the initial decision in September, which the commission upheld Monday. Intuit had appealed to the FTC as part of the process. In a statement Monday, Intuit said it has appealed "this deeply flawed decision" to federal circuit court outside of the FTC. "Absolutely no one should be surprised that FTC Commissioners -- employees of the FTC -- ruled in favor of the FTC as they have done in every appeal for the last two decades. This decision is the result of a biased and broken system where the Commission serves as accuser, judge, jury, and then appellate judge all in the same case," an an Intuit spokesperson said.
Can't call it free unless it's free to customers (Score:4, Interesting)
They ruled that they can't call it free unless it's free to customers, and that means all the customers.
Seems like a fair ruling to me.
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It is free to customers who have simple returns (as many, many do). Most people, in spite of what the article claims, meet those requirements.
Their web site says that the free product includes, for example, all the ACA forms (anyone who got an Advance Premium Tax Credit to help pay for their health insurance premiums must file a return - although I know some that took the APTC every year and the IRS hasn't bothered them yet over a decade later).
It's like advertising "free drink with entree" doesn't mean tha
Re:Can't call it free unless it's free to customer (Score:5, Interesting)
It is free to customers who have simple returns (as many, many do). Most people, in spite of what the article claims, meet those requirements.
Really? It doesn't apply to anyone who:
And so on. The number of limitations is quite large, and many of those limitations cover a rather large number of people. Even Intuit themselves have estimated that only 37% of Americans qualify for their free offerings. That's a long way from "most".
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You are correct that "most" is an overstatement - Intuit estimates that "only" about 37% of filers qualify. That may not be "most" (as in over 50%), but it's a lot and certainly "many".
Since SALT are no longer deductible, fewer people itemize than they once did.
In Tax Year 2020 [irs.gov] the IRS estimates that 164,358,792 1040/1040-SRs were filed. Of these, only 15,812,365 (i.e., 9.6%) filed Schedule A which is necessary if one is itemizing. That's way below your estimate of "over 30% of Americans" (assuming that you
Re:Can't call it free unless it's free to customer (Score:4, Interesting)
Since SALT are no longer deductible, fewer people itemize than they once did.
Actually, state and local taxes are still deductible, just with an arbitrary cap that's lower than the standard deduction, which did lower the number of people who itemize.
In Tax Year 2020 [irs.gov] the IRS estimates that 164,358,792 1040/1040-SRs were filed. Of these, only 15,812,365 (i.e., 9.6%) filed Schedule A which is necessary if one is itemizing. That's way below your estimate of "over 30% of Americans" (assuming that you meant "federal income tax returns filed by Americans" rather than "Americans").
Heh. It turns out that Google Search lied to me. I trusted its result without digging in further. Had I done so, I would have noticed that the document it referenced for its answer [taxpolicycenter.org] was written in 2018, before the SALT cap, and in the very next sentence, it mentioned that the number would drop in the future because of the SALT cap.
That said, barring any new legislation, the SALT cap abomination will expire at the end of next year, so two years from now, we'll probably be back at close to 30% of people itemizing, give or take.
Similarly, only 25,991,494 (i.e., 16%) filed Schedule D where long/short term capital gains are shown if one sells stock which is well less than your "up to 60%" estimate implies (yes, technically "up to" would include any number less than 60% but it certainly implies to the casual reader far more than 16%).
The only number I could find quickly for this was the number of people who own stock (60%), which is very much an upper bound for the maximum number of people who could sell stock in any given year. Thanks for providing a more useful number.
However, that's only half the story. 63% of all people over 65 own stock [yahoo.com], and you can bet that most of them either are or will be using that stock to supplement their retirement income in the near future. That means that retirees living on limited income — some of the people who you would most want to provide with free tax preparation — are highly likely to have stock income.
I'm also quite sure you're substantially overestimating when you imply that the number of "Americans" who earn money as contractors are "up to 30%" (again, true that 0% is also "up to 100%", but such interpretation is misleading - whether intentionally or unintentionally).
Feel free to disagree with Forbes [forbes.com], then.
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That said, barring any new legislation, the SALT cap abomination will expire at the end of next year, so two years from now, we'll probably be back at close to 30% of people itemizing, give or take.
Speaking personally, I stopped itemizing when the standard deduction went up. It's now so high that my "big three" deductible items (charitable giving, mortgage interest and state income tax) no longer come close to the standard deduction... so I don't even bother trying to add up all the little ones.
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That said, barring any new legislation, the SALT cap abomination will expire at the end of next year, so two years from now, we'll probably be back at close to 30% of people itemizing, give or take.
Speaking personally, I stopped itemizing when the standard deduction went up. It's now so high that my "big three" deductible items (charitable giving, mortgage interest and state income tax) no longer come close to the standard deduction... so I don't even bother trying to add up all the little ones.
For me, personally, and for a lot of folks in the Bay area, the SALT cap is the main limiting factor. The average total compensation for tech jobs in the Bay Area is $245k. At that level, even if you maximize your 401k contribution ($22.5k), you're still paying over $17k in income tax. (The break-even point is about $218,786.56 by my math.)
And that's assuming that you don't own property or a car. In Santa Clara county, the median property tax is $9,059 per year. So someone earning median income, not co
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Earns any money as a contractor (including gig economy workers, which could be up to 30%)
To clarify for anyone. If you did time with Uber, Lyft, InstaCart, etc... Or received Venmo, CashApp, etc over $600. You cannot free file.
Pretty much every tax preparation service has indicated that most people DO NOT qualify for free file. Now they'll be quick to blame the fall out of the 1040EZ but the reality is that it was never the case. The entire point was to always trick people.
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The entire point was to always trick people.
My biggest problem with TurboTax started last year when I noticed some small print in the EULA:
You understand that by using certain Services, you are providing written instructions in accordance with the Fair Credit Reporting Act and other applicable law to permit Intuit Inc. and its affiliated companies to obtain and periodically refresh your credit information and other information about you from third parties for marketing, eligibility, and other purposes described in Intuit's Global Privacy Statement .
Re: Can't call it free unless it's free to custome (Score:2)
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Amen. The devil is in the details, and the headline is an embellishment. All advertising is false, in my opinion.
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It also isn’t free if you make more than $73,000 in 2022.
I have made more than that since I was 23, back when $73,000 was worth $110,000 in today’s money.
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You've got that right.
Oh, and your books? Ok, "a weapon that would destroy a sun"? Yep, humor.
You might be interested my published novel, 11,000 Years, and my upcoming one, Becoming Terran (available for pre-order at B&N, Kobo, and smashwords).
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It's like advertising "free drink with entree" doesn't mean that every possible drink the restaurant offers is free.
Now if the limitations were not clear and only made clear after you had invested significant effort into filling out forms and providing information, that would be a problem.
What Intuit did was to advertise "free drink (... implied for most people ...)" knowing that most (63%) customers don't qualify. It may be true that too much verbiage is needed to explain who qualifies for the free version and who doesn't. However, in that case, saying "free" without qualification is bait and switch. Even though most people may not fall for bait and switch, it's still beneficial for the vendor, so it's illegal.
Bingo [Re:Can't call it free unless it's free] (Score:3)
Now if the limitations were not clear and only made clear after you had invested significant effort into filling out forms and providing information, that would be a problem.
BINGO. That's exactly the tactic they used.
Re: Can't call it free unless it's free to custome (Score:5, Insightful)
These fucks have been advertising fraudulently.
Fraud is illegal.
If you stand up for their right to defraud, you're a fuck too.
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not what I am saying at all you stupid fuck
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replace free with say basic $0.99 and make it so t (Score:2)
replace free with say basic $0.99 and make it so that next to no one can use that basic.
Just like the hotel resort fee
Re:Can't call it free unless it's free to customer (Score:5, Insightful)
they may have a point on the advertising but at the same time we are ok with the FTC telling companies what they can and can not give away for free now?
They aren't telling companies what they can or can not give away for free. They are telling companies what they can or can not advertise as being free.
It's a judgement call as to whether they are deceiving people when the advertisement says free but -- quoting the article-- "most tax filers couldn't use the company's "free" services." The judgement was that they were deceptive.
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In 28 years, I think that you’re the first person who both uses their real name and provides a link to their website in their slashdot bio...
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In 28 years, I think that you’re the first person who both uses their real name and provides a link to their website in their slashdot bio...
No, I don't post often but my real name and website link have been in my bio for 20 years. Here they are:
E Douglas Jensen
real-time.org
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Nobody should be ok with the FTC here. The 1st Amendment clearly states Congress can pass no law abridging freedom of speech or the press. No law means no law.
Freedom of the press does not mean freedom to defraud people.
That's the issue here. You may call it "bait and switch," but that's just a sophisticated phrase for "fraud."
Re: Can't call it free unless it's free to custome (Score:1)
How about if they said "Free to qualified tax filers"?
The IRS is offering a free tax filing service as I recall - will it be free for ALL? If not, will the FTC go after the IRS?
IRS Free File lets qualified taxpayers prepare and file federal income tax returns online using guided tax preparation software. Itâ(TM)s safe, easy and no cost to you. Those who donâ(TM)t qualify can still use Free File Fillable Forms.
"Those who don't qualify..."?
So this IRS Offering [irs.gov] is just as deceptive as the TurboTax offering - can't wait for the FTC to go after the IRS...
Re: Can't call it free unless it's free to custome (Score:4, Informative)
Because it's almost as though the IRS stated the terms clearly and right there on the very page you linked to? Maybe that's the difference?
Guided Tax Software provides free online tax preparation and filing at an IRS partner site. Our partners deliver this service at no cost to qualifying taxpayers. Taxpayers whose AGI is $79,000 or less qualify for a free federal tax return.
Free File Fillable Forms are electronic federal tax forms, equivalent to a paper 1040 form. You should know how to prepare your own tax return using form instructions and IRS publications if needed. It provides a free option to taxpayers whose income (AGI) is greater than $79,000.
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Re: Can't call it free unless it's free to custome (Score:1)
There are lots of things that are free but not free to either a subset of customers or in the sense that alternative payment is done.
Eg Twitter and Facebook is free, certain features are paid and even if you donâ(TM)t pay, your data is/becomes the currency.
There is no such thing as free, buy 1 get 1 free is really buy 2 at half price.
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Not necessarily. By 1 get 1 free can also lower the inventory of obsolete, unfashionable or soon-to-expire stock.
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Not saying there is no reason to market as such, but the absolute cost of the second item is not free since you need the first item at full price, the second item is not free, the product is available at half the cost for whatever reason.
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They ruled that they can't call it free unless it's free to customers, and that means all the customers.
Seems like a fair ruling to me.
Its about time. The FTC needs to spell it out so that the consequences will outweigh the profits earned by repeatedly breaking the law and being fined.
Free pants (Score:2)
Sorry, 4XL sizes not available. Guess I'm going to prison for false advertising.
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From the summary:
"most tax filers couldn't use the company's "free" services."
It's more like "Sorry, the offer only applies to women size 4."
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TurboTax is an excellent product - why do they have to cheat???
Because they know their days are numbered.
The vast majority of people could and should just get a bill from the IRS each year or just have it automatically taken from their paycheck.
The IRS is trying to slowly kill the tax return companies and their lobbyists by offering free returns for these simple cases.
These simple returns are a great money maker for Turbo Tax to offer cash advances on refunds.
They want to offer a free option to compete with the government free option but don't want it to actually be fr
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Bingo. Filing personal income tax once a year is a wasteful and redundant process. We have been doing most of the paperwork up front to handle payroll deductions automatically for decades. It's not a huge step to eliminate tax deadlines and the massive nation-wide stress event. Services like H&R Block and Turbo Tax are going to be wiped out soon, but it's a bit of a broken window fallacy. These companies exist to deal with a process that shouldn't be needed in the first place. Inflicting April 15th on m
Re: Why do they have to cheat??? (Score:2)
No, TurboTax is very confusing, so confusing even a leading economist and future Treasury Secretary couldn't use it correctly. [forbes.com]
Re: Why do they have to cheat??? (Score:1)
That is a function of the tax code, not TurboTax. If you want to file for free, you can do that without TurboTax, irs.gov, get the form, fill it out and send it in.
If you want to file correct and maximize your return in the process, that is virtually impossible with the current tax code.
What TurboTax offers to do for free is download and fill out the basic forms for you, then based on the information it makes you an offer to file additional forms, for potentially greater returns than the filing cost. The ex
Don't forget (Score:5, Informative)
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The mandate that taxes should be simple and free is an invention by the FTC. /quote
The FTC is not immune from regulatory capture. The mandate for a free version is an invention of the tax prep companies in order to create a barrier to entry for anyone who would dare to make cheap tax prep software that targeted only the easy customers.
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For simple tax returns you don't need a prep company, there is an EZ form. Again, the fact you need more complex forms is not the fault of the accountants.
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What purpose does the mandate serve other than to widen the moat for the benefit of existing tax software providers? More complex forms are the fault of the accountants because they are the ones who lobby congress to keep it complex.
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Also, at least the time I tried to do it in my younger years, they would let you get through most of the way through the 1040, then say "Whoops, you really should file these other forms using our premium service."
New Ads (Score:3)
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They knew this was coming, and were prepared for it.
And direct filing with IRS pilot this year (Score:5, Informative)
IRS Direct File Update: Free, secure, IRS-run, electronic filing option on track to be available in 2024 as a limited pilot [irs.gov]
Which TurboTax is also hopping mad about currently.
Couldn't have happened to nicer folks....
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You imply the existence of the IRS tool means the other tools cease to exist.
What do you base that off of or is it just partisan knee-jerkery?
Re:And direct filing with IRS pilot this year (Score:4, Insightful)
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No, it's like clicking and having a $350k sports car, removing it from your shopping cart, adding a $10k cheapo car, but getting charged the $5k "you used to have a sports car in your cart" fee on top of it.
TurboTax charged people who qualified for their free service due to intentionally making their website confusing to trick people into accidentally selecting the pay service. They lost a lawsuit about that and paid partial refunds to some of those customers.
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Having experienced the problem you say doesn't exist, I have to disagree.
There's people like my grandparents, people with minimal literacy, have put too much time in, etc... A percentage will pay, and that's all Inuit cares about.
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Lol, You are posting this to a site where, in the next thread over, people are hopping mad over a Netflix $5 a month price increase.
The fix is in (Score:2)
Re: And direct filing with IRS pilot this year (Score:2)
Gig Economy (Score:5, Insightful)
Or, you know (Score:2, Troll)
Could've been sooooo easy for Turbotax to avoid (Score:3)
Those guys are arrogantly stupid. They think they can swindle people out of money so easily; I'm glad the FTC is still coming down on them hard.
They could've avoided that so easily, by doing any one of these variations:
"File Now! Free for low-income individual and families"
"File for Free*!" with the [*] conditions listed/linked immediately below text
"File for Free (conditions apply)" with direct link to conditions
File Now! Free for low-income individuals (no 1099 (Score:4, Insightful)
File Now! Free for low-income individuals (no 1099 work)
so if you did some uber to bad to you need to pay full price
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So like I said, use the "...Free (conditions apply)" one and specify the conditions separately (yes, including anything about 1099 that might affect the price)
The fifth kind of free (Score:2)
Free as in speech
Free as in beer
Free as in yacht
Free as in mattress
Now, free as in pickpocket
Kick inuit to the curb (Score:4, Insightful)
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https://www.propublica.org/art... [propublica.org]
https://fortune.com/2023/04/17... [fortune.com]
https://readsludge.com/2023/11... [readsludge.com]
https://www.irs.gov/newsroom/i... [irs.gov]
https://www.nytimes.com/2023/0... [nytimes.com]
https://www.washingtonpost.com... [washingtonpost.com]
You could have typed "I know nothing about this topic" and saved a few words.
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Yeah, it's illegal for federal agencies to compete with free market companies...
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Their method of resistance (Score:2)
fix tax code (Score:3)
It is the fucked up tax code that leaves a perfect market for this kind of software. Want to fix how fucked it is to file taxes? Great, fix the tax code and we won't need a bunch of over-priced software.
best refund guarantee is a lie, too (Score:4, Informative)
I'm sure (Score:3)
I'm sure this has nothing at all to do with the news that the IRS plans to offer it's own tax filing "service".
Dear TurboTax (Score:2)
Your corporation doesn't have a right to a trial: If you want to be equal to a person before the law, demand the equality of the death penalty, first. Your free speech doesn't include the right to lie to the government, well, not the "judge, jury" part of the government.
This is a thinly-veiled demand that the law helps TurboTax buy the jury and verdict TurboTax prefers.