In a recent development, Senator Elizabeth Warren (D-MA) has accused TurboTax, a product of Intuit, of "relentlessly upselling" customers and diverting them from free services. The senator has penned a letter to the Federal Trade Commission (FTC), urging the agency to continue its oversight of the tax preparation company.
Warren's staff conducted an analysis of TurboTax's services using a sample taxpayer. The findings revealed that the company attempted to upsell the customer eight times during the tax filing process. The senator expressed concern that these solicitations "appear to be efforts to mislead customers into thinking that they must pay the extra fees in order to file their taxes when that is not the case."
In one instance, TurboTax highlighted its $89 tax filing package as "the right option" for the sample taxpayer, relegating the free option to the bottom of the page. After opting for a single upgrade, the sample taxpayer, who had "simple" filing requirements, was charged an additional $69 to report her unemployment income and educator expenses, and $64 to file Massachusetts state tax returns. This amounted to a total of $133, a fee that Warren argues could be avoided through the IRS's free Direct File service.
The IRS is currently testing its Direct File service in 13 states, including Arizona, California, Massachusetts, New York, Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming.
Last year, the FTC ruled that TurboTax had "deceived customers" by advertising its tax filing services as "free" and subsequently ordered the company to cease such practices. Despite this, Warren stated that it is "outrageous that the company continues to fight the FTC lawsuit and lobby against the IRS Direct File program."
Warren has been a vocal advocate for a free, direct E-File program to simplify tax filing for millions of Americans. She has consistently held tax preparation companies accountable for their practices and has been instrumental in pushing for the IRS to develop its own free online tax preparation and filing service.
The senator concluded her letter by applauding the FTC's efforts to crack down on Intuit's false advertising and junk fees, and urged the commission to "continue your efforts to protect taxpayers from these schemes."
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