Intuit Inc., the maker of TurboTax, is facing further legal challenges as an administrative judge from the Federal Trade Commission (FTC) rules against the company’s alleged deceptive practices. The FTC initially sued Intuit more than a year ago, accusing the company of misleading customers into thinking they could file their taxes for free with TurboTax.
In response to the ruling, Intuit has stated its intentions to continue fighting the case, even if it means incurring “significant costs.” The company plans to appeal the decision to the FTC Commissioners and, if necessary, to a federal court of appeals. Despite the ruling against them, Intuit remains confident that it will not face a monetary penalty or any significant impact on its business.
Intuit has already reached a $141 million settlement with state attorneys general regarding the allegations of deceptive advertising. However, the company has not admitted liability in the settlement and maintains that it has been transparent with customers about costs.
The ongoing legal battle between Intuit and the FTC is occurring against the backdrop of a broader fight over free tax preparation. The Internal Revenue Service (IRS) is planning to test a pilot program in the upcoming filing season, allowing taxpayers to file directly with the IRS instead of utilizing tax preparation companies or individual preparers. However, both TurboTax and the tax software industry oppose this proposed IRS direct file system.
In addition to the legal disputes, the government shutdown is also impacting the IRS’s budget. The House appropriations bill seeks to prevent the IRS from using any funds to develop the direct file system, further intensifying the disagreement over IRS funding.
Despite the legal challenges and regulatory issues, Intuit’s shares have closed 1.4% higher on Friday, remaining relatively unaffected by the news. The company’s shares have seen a 41% increase this year, outperforming the Dow Jones Industrial Average and the S&P 500.
As the legal battle between Intuit and the FTC continues, the future of free tax preparation remains uncertain. The IRS’s pilot program and the challenges from industry players highlight the ongoing debate and the potential impact on taxpayers. The outcome of this case will have significant implications for the tax preparation industry and how taxpayers file their taxes in the future.