![TurboTax headquarters](https://upload.wikimedia.org/wikipedia/commons/1/1b/TurboTax_headquarters.jpg)
TurboTax is a software package for preparation of American
income tax returns, produced by
Intuit
Intuit Inc. is an American business software company that specializes in financial software. The company is headquartered in Mountain View, California, and the CEO is Sasan Goodarzi. Intuit's products include the tax preparation application Tu ...
. TurboTax is a
market leader
Market dominance describes when a firm can control markets. A dominant firm possesses the power to affect competition and influence market price. A firms' dominance is a measure of the power of a brand, product, service, or firm, relative to c ...
in its product segment, competing with
H&R Block Tax Software and
TaxAct
TaxAct Holdings, Inc. is an American tax preparation software company based in Cedar Rapids, Iowa. The company offers its own software package "TaxAct" to individual tax registers, companies and professional affiliates. The company was founded i ...
.
TurboTax was developed by Michael A. Chipman of Chipsoft in 1984 and was sold to
Intuit
Intuit Inc. is an American business software company that specializes in financial software. The company is headquartered in Mountain View, California, and the CEO is Sasan Goodarzi. Intuit's products include the tax preparation application Tu ...
in 1993.
The company has been subject of controversy over its political influence and deceptive business practices. Intuit, the maker of TurboTax, has lobbied extensively against the
Internal Revenue Service
The Internal Revenue Service (IRS) is the revenue service for the United States federal government, which is responsible for collecting U.S. federal taxes and administering the Internal Revenue Code, the main body of the federal statutory ta ...
(IRS) creating its own online system of tax filing like those that exist in most other wealthy countries. Intuit is under investigation by multiple state attorneys general, as well as New York's Department of Financial Services.
As part of an agreement with the IRS
Free File program, TurboTax allowed individuals making less than $39,000 a year to use a free version of TurboTax; a 2019
ProPublica
ProPublica (), legally Pro Publica, Inc., is a nonprofit organization based in New York City. In 2010, it became the first online news source to win a Pulitzer Prize, for a piece written by one of its journalists''The Guardian'', April 13, 2010P ...
investigation revealed that TurboTax deliberately made this version hard to find, even through search engines, and that it deceptively steered individuals who search for the free version to TurboTax versions that cost money to use. TurboTax has tricked military service members to pay to use the filing software by creating and promoting a "military discount" and by making the free version hard to find when many service members are in fact eligible to use the software for free.
Overview
Intuit Consumer Tax Group is based in San Diego, California.
Intuit
Intuit Inc. is an American business software company that specializes in financial software. The company is headquartered in Mountain View, California, and the CEO is Sasan Goodarzi. Intuit's products include the tax preparation application Tu ...
Corporation, which owns Intuit, is headquartered in
Mountain View, California
Mountain View is a city in Santa Clara County, California, United States. Named for its views of the Santa Cruz Mountains, it has a population of 82,376.
Mountain View was integral to the early history and growth of Silicon Valley, and is the ...
.
There are a number of different versions, including TurboTax Deluxe, TurboTax Premier, etc. TurboTax is available for both federal and state income tax returns. The software is designed to guide users through their
tax returns
A tax return is the completion of documentation that calculates an entity or individual's income earned and the amount of taxes to be paid to the government or government organizations or, potentially, back to the taxpayer.
Taxation is one of ...
step-by-step. The TurboTax software provides taxpayers additional support for their self-prepared returns by offering Audit Defense from
TaxResources, Inc.
Typically, TurboTax federal software is released late in the year and the state software is released mid-January to mid-February. TurboTax normally releases its new versions as soon as the IRS completes revisions to the forms and approves the TurboTax versions, usually late in the tax year. The process is similar for states that collect income taxes.
In 2001, TurboTax saved financial institution passwords entered by users to servers at Intuit and the home computer. The programming error was reportedly fixed, but as of 2012 TurboTax offers no option to download a data file directly from the financial institution. Instead, it prompts the user for their login name and password at the financial institution or permits the data to be entered by hand.
In 2003, Intuit faced vocal criticism for its TurboTax activation scheme. The company responded by removing the
product activation
Product activation is a license validation procedure required by some proprietary software programs. Product activation prevents unlimited free use of copied or replicated software. Unactivated software refuses to fully function until it ''determin ...
scheme from its product. In 2005 TurboTax extended its offering by allowing any taxpayer to use a basic version of its federal product for free as part of the
Free File Alliance
The Free File Alliance is a group of tax preparation companies which operate a public-private partnership with the Internal Revenue Service (IRS) to provide free electronic tax filing services under the IRS Free File program to United States taxp ...
. By 2006 that offer has been limited to free federal online tax preparation and e-file for taxpayers whose
adjusted gross income
In the United States income tax system, adjusted gross income (AGI) is an individual's total gross income minus specific deductions. It is used to calculate taxable income, which is AGI minus allowances for personal exemptions and itemized deduc ...
is $28,500 or less (or $52,000 for those in the military) and those 50 or under. TurboTax has received a number of complaints regarding its advertising of the free version. For filers who use this basic version of the software, federal filing is free. However, state
tax filing is not free, and the cost of using TurboTax to file state returns is not presented to the user until they've already completed entering their information for federal returns.
In 2008, Intuit raised the price of TurboTax for desktop customers by $15 and included a free e-filing for the first return prepared. The company's new "Pay Per Return" policy was criticized for adding a $9.95 fee to print or e-file each additional return after the first, including returns prepared for members of the same household. On December 12, 2008, the company announced that it had rescinded the new policy.
On January 21, 2009, TurboTax received considerable public attention at the Senate confirmation hearing of
Timothy F. Geithner
Timothy Franz Geithner (; born August 18, 1961) is a former American central banker who served as the 75th United States Secretary of the Treasury under President Barack Obama from 2009 to 2013. He was the President of the Federal Reserve Bank o ...
to be the
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
Secretary of Treasury
The United States secretary of the treasury is the head of the United States Department of the Treasury, and is the chief financial officer of the federal government of the United States. The secretary of the treasury serves as the principal a ...
. Geithner had testified that he used TurboTax to prepare his tax returns for the years 2001 to 2004 but had incorrectly handled the self-employment taxes due as a result of his being employed by the
International Monetary Fund
The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster globa ...
. Geithner made it clear that he took responsibility for the error, which was discovered in a subsequent IRS audit, and did not blame TurboTax. Geithner paid $42,702 in back taxes. Intuit responded by releasing a statement saying "TurboTax, and all software and in-person tax preparation services, base their calculations on the information users provide when completing their returns."
On July 15, 2021, Intuit announced its withdrawal from the Free File Alliance, effective after the tax season concluding in October 2021, stating that "due to the limitations of the Free File program and conflicting demands from those outside the program, we are not able to continue in the program."
International versions
Intuit also addresses
Canadian tax returns with an entirely separate product also named TurboTax, but previously called QuickTax. The French version has retained its original name ImpĂ´tRapide until 2017, when it was renamed TurboImpĂ´t.
Controversies
Blocking search engines from indexing its "free file program" page
Citizens of the US that make up to $72,000 per year are eligible for free preparation and filing of tax forms through the IRS
Free File program. However, TurboTax's "free file program" page (https://turbotax.intuit.com/taxfreedom/) contains specific HTML tags (noindex, nofollow) which block search engines from indexing it. TurboTax has been deceiving customers which were eligible for the free submission into signing up for their commercial product. Starting December 30, 2019, under a new agreement from the IRS, TurboTax can no longer hide their free version services from search results.
Writing to the boot track
The 2003 version of the TurboTax software contained
digital rights management
Digital rights management (DRM) is the management of legal access to digital content. Various tools or technological protection measures (TPM) such as access control technologies can restrict the use of proprietary hardware and copyrighted works. ...
that tracked whether it had previously been installed on a computer by writing to sector 33 on the hard drive. This allowed it to track if it was on a computer previously, even through reinstalling the operating system. This also caused it to conflict with some boot loaders that store data there, rendering those computers unbootable.
Opposition to return-free filing
Intuit, the owner of TurboTax, spent more than $11 million on federal lobbying between 2008 and 2012. Intuit "opposes IRS government tax preparation", particularly allowing taxpayers to file pre-filled returns for free, in a system similar to the established
ReadyReturn service in California. The company also lobbied on bills in 2007 and 2011 that would have barred the Treasury Department, which includes the IRS, from initiating return-free filing. An Intuit spokeswoman said in early 2013 that "Like many other companies, Intuit actively participates in the political process." She said that
return-free filing had "implications for accuracy and fairness in taxation."
This led journalist
Dylan Matthews
Dylan Matthews is an American journalist. He is currently a correspondent for ''Vox (website), Vox'', an online media venture.
Professional life
Early writing
In 2004, at the age of 14, Matthews launched a personal blog on politics and other is ...
to propose a boycott of the company in 2017.
In its 2012
Form 10-K A Form 10-K is an annual report required by the U.S. Securities and Exchange Commission (SEC), that gives a comprehensive summary of a company's financial performance. Although similarly named, the annual report on Form 10-K is distinct from the of ...
, Intuit said that "We anticipate that governmental encroachment at both the federal and state levels may present a continued competitive threat to our business for the foreseeable future."
Repositioning of versions
In January 2015 it became known that the Deluxe version no longer supports IRS Schedules C, D, E, and F in interview mode. Although the Deluxe version still allows entry into those schedules by means of "form mode", doing so may result in the loss of the ability to file electronically. In addition, the Premium version no longer supports Schedule C or F in interview mode. Intuit was widely criticized for these changes and responded with short-term mitigation, although it has not reversed the decision. On February 5, 2015, Intuit sent a second email apology to current and former customers regarding the decision to remove specific schedules from the Deluxe and Premium versions. Intuit also apologized for their poorly received initial apology sent on January 27. In the February 5 message Intuit announced that they would reverse course in their 2015 Deluxe and Premium versions, including the schedules that were historically included in the software.
Fraudulent return claims
In an article by
Brian Krebs
Brian Krebs (born 1972) is an American journalist and investigative reporter. He is best known for his coverage of profit-seeking cybercriminals.Perlroth, Nicole.Reporting From the Web's Underbelly. ''The New York Times''. Retrieved February 28, ...
on February 15, 2015, it was reported that Intuit Inc. temporarily suspended the transmission of state e-filed tax returns due to a surge in complaints from consumers about refunds already claimed in their name.
In a later article on February 22, 2015, Krebs reported that it was alleged by two former employees that
Intuit
Intuit Inc. is an American business software company that specializes in financial software. The company is headquartered in Mountain View, California, and the CEO is Sasan Goodarzi. Intuit's products include the tax preparation application Tu ...
knowingly allowed fraudulent returns to be processed on a massive scale as part of a revenue boosting scheme. Both employees, former security team members for the company, stated that the company had ignored repeated warnings and suggestions on how to prevent fraud. One of the employees was reported to have filed a
whistleblower
A whistleblower (also written as whistle-blower or whistle blower) is a person, often an employee, who reveals information about activity within a private or public organization that is deemed illegal, immoral, illicit, unsafe or fraudulent. Whi ...
complaint with the US Securities and Exchange Commission.
Diverting stimulus funds away from customers
In 2021, some individuals who used Turbotax for their tax filings were unable to access stimulus checks sent by the government because Turbotax diverted the checks to old and unused bank accounts for the customers.
Deceptive advertising of its "free" tax filing products
On March 29, 2022, the
Federal Trade Commission
The Federal Trade Commission (FTC) is an independent agency of the United States government whose principal mission is the enforcement of civil (non-criminal) antitrust law and the promotion of consumer protection. The FTC shares jurisdiction ov ...
announced that they would take legal action against Intuit, the parent company of TurboTax in response to deceptive advertising of its free tax filing products. The commission reported that the majority of tax filers cannot use any of TurboTax's free products which were advertised, claiming that it has misled customers to believing that tax filers can use TurboTax to file their taxes. In addition, tax filers who earn farm income or are gig workers cannot be eligible for those products. Intuit announced that they would take counter action, announcing that the FTC's arguments are "not credible" and claimed that their free tax filing service is available to all tax filers.
On May 4, 2022, Intuit agreed to pay a $141 million settlement over the misleading advertisements.
References
External links
* {{official website, http://turbotax.intuit.com/ (paid tax filing)
IRS Free File Programon Intuit official website (free tax filing)
Intuit software
Tax software of the United States
2001 software