$______ RECOVERY - BREACH OF CONTRACT - CLASS ACTION SETTLES WITH PROMINENT TAX SOFTWARE PROVIDER - LEADING TAX PREPARATION SOFTWARE PROVIDER MAKES FALSE REPRESENTATION OF SERVICE AS FREE.

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Summaries with Trial Analysis

$141,000,000 RECOVERY – BREACH OF CONTRACT – CLASS ACTION SETTLES WITH

PROMINENT TAX SOFTWARE PROVIDER – LEADING TAX PREPARATION SOFTWARE

PROVIDER MAKES FALSE REPRESENTATION OF SERVICE AS FREE.

U.S.D.C. - Northern District of California

In this class action suit, a prominent business

software company was accused of misleading

consumers and violating an agreement with the

federal government. The matter was resolved with

a settlement.

The defendant Intuit, Inc. is a business and financial

software company headquartered in Mountain View,

California. Defendant’s products include TurboTax, a

leading tax preparation software that provides step-

by-step guidance for filling out state and federal tax

returns and permits users to electronically file their tax

returns using a computer or other mobile device. The

IRS requires defendant to cumulatively offer 70 per-

cent of U.S. taxpayers the option to file their taxes for

free. For the 2018 tax season, any taxpayer whose

adjusted gross income is $66,000 or less is eligible to

use tax preparation software from one of these pro-

viders to prepare and file their tax returns for free. The

defendant allegedly violated this agreement by di-

verting qualified taxpayers away from the “Free filing”

program in favor of its paid products through segre-

gation of its “free file” webpage from its primary

website, as well as altering the website to conceal it

from search engines. The defendant was further ac-

cused of marketing its paid offerings as “Free Guar-

anteed” in order to mislead taxpayers into believing

they were using a free-filing program.

The plaintiffs Brianna S, Michele A, and Joseph B filed

suit individually and on behalf of all others similarly sit-

uated in the U.S. District Court for the Northern District

of California. 6 claims were filed against defendant

Intuit, including Breach of Contract, violation of New

York’s General Business Law, Pennsylvania’s Unfair

Trade Practices and Consumer Protection Law, Cali-

fornia’s Consumer Legal Remedies Act, and Califor-

nia’s Unfair Competition Law. The plaintiffs sought

recovery of damages including millions charged to

US taxpayers as a result of the alleged violations. De-

fendant denied the accusations. The suit was

ultimately joined by all 50 states and the District of

Columbia.

The matter was resolved with a $141 million settle-

ment with the class, with approximately $2.5 million of

that to be allocated to administrative costs. The de-

fendant will refrain from allowing the de-indexing of

the IRS Free File Program by TurboTax, and will make

several public disclosures regarding the program. In-

tuit will create at least three blog posts between Jan-

uary and April of 2022 to inform customers regarding

the program, as well as a minimum six email per cus-

tomer until the customer files their taxes or

unsubscribes from the emails. Intuit will adhere to

Federal Trade Commission (FTC) online marketing

guidelines for as Intuit participates in the IRS Free File

program, up to 3 years maximum.

REFERENCE

Sinohui, et al. vs. Intuit, Inc. Case no. 5:19-cv-02546;

Judge Charles Breyer, 05-04-22.

Attorneys for plaintiff: Eric H. Gibbs and Aaron

Blumenthal of Gibbs Law Group, LLP in Oakland, CA.

COMMENTARY

All 50 states and the District of Columbia were party to this action,

and have received disbursal from the settlement through the efforts

of their attorney generals’ offices. The State of Minnesota has re-

ceived $683,522 from the settlement. Maine will receive

$701,357.86 for consumers who were deceived into paying to file

their federal tax return. Connecticut’s Attorney General secured

$1.2 million in restitution for 40,841 state residents. Deceived resi-

dents of New Hampshire will receive $683,522 in total.

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Volume 37, Issue 6, June 2022

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