TurboTax's parent company, Intuit, was accused of baiting customers with free tax prep, then pushing them into paid services.
Intuit, owner of the tax-filing software TurboTax, has agreed to a $141 million settlement in the wake of a Federal Trade Commission complaint that it deceived millions of Americans into paying for online tax-return services that should have been free.
In July 2021, Intuit withdrew from the IRS' Free File Alliance to launch TurboTax Free Edition, which it said customers with "simple tax returns" that used IRS Form 1040 could use for no charge.
"For years, Intuit misled the most vulnerable among us to make a profit," James said in a May 4 statement. "This agreement should serve as a reminder to companies large and small that engaging in these deceptive marketing ploys is illegal."
Intuit will provide restitution to nearly 4.4 million people in all 50 states who used TurboTax's Free Edition between tax years 2016 and 2018.
No action needs to be taken, according to Halimah Elmariah, a spokesperson for the New York State Attorney's Office. Eligible TurboTax users will receive notification, either in an email or letter.
According to James' office, people who qualify will automatically receive a direct payment of approximately $30 for each year that they were deceived into paying for filing services. The checks will come from the $141 million settlement, minus $2.5 million in administrative costs.
Because the settlement involves multiple states, the payments will be handled through a third-party administrator, Elmariah told CNET. An exact timeline hasn't been determined yet, but she said she expects checks would be sent out in the next few months.