LA Sues TurboTax, H&R Block For Misleading, Deceiving Low-Income Taxpayers

LOS ANGELES (CBSLA) – TurboTax and H&R Block have intentionally deceived low-income users into paying for services they should have received for free, according to new lawsuits filed against the tax preparation giants by L.A. City Attorney Mike Feuer.

In his lawsuits, Feuer claims that the two companies intentionally went out of their way to block low-income taxpayers from accessing the IRS's Free File Software.

Free File is a partnership between the IRS and several tax preparation companies through which people making a gross income of $66,000 or less are allowed to file their taxes for free.

Feuer cited numbers from ProPublica, which found that while 70 percent of all taxpayers were eligible to use Free File in the 2018 fiscal year, only 2.5 percent did.

The lawsuits allege that TurboTax and H&R Block used specific code on their websites to hide their Free File programs from users who searched for them using Google.

Furthermore, TurboTax's parent company Intuit Inc., along with H&R Block, "aggressively" marketed their own "inferior" versions of Free File "which are useless to all but those with the simplest of tax returns," the city attorney said in a news release.

For example, freelancers who are not classified as employees, such as Uber or Lyft drivers, would not be eligible for the inferior free programs offered by H&R Block and TurboTax, the lawsuits claim.

"Taxpayers should never be misled into needlessly spending their hard-earned money for services to which they're entitled for free. But that's what we allege happened here," Feuer told reporters at a news conference Tuesday. "In short, we allege these companies intentionally took advantage of the low-income residents they pledged to help."

The lawsuits seek injunctive relief, restitution and civil penalties.