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TurboTax tricks US service members out of a free tax filing, ProPublica says

Military tax filing (Lance Cpl. Victor Barerra/US Coast Guard)
May 26, 2019

A major tax preparation company has been misrepresenting special promotions they offer to military service members.

TurboTax advertises a free preparation and filing service to military members, but has concealed the free military option on their website, and tricked service members into paying for upgraded services instead, according to an exclusive investigation by ProPublica co-published with Military Times.

TurboTax made a deal with the IRS stating that military service members with an annual income of $66,000 or less would be able to file their taxes at no charge. However, by concealing the free filing option for service members, they unknowingly complete their taxes on a different section of the website and they’re slapped with a fee, ProPublica found.

Users don’t know they have to pay anything until after they have spent the time completing their taxes.

When ProPublica investigated the claims, they discovered that TurboTax Military pushed upgrades at least six times during the filing for a Navy sailor and his wife with an annual income of $53,000.

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The website suggested they buy “+PLUS,” which promises “24/7 tax return access” and other services for $19.99 and MAX audit defense and identity loss insurance for $59.99. At the end of the filing process, they were charged $159.98 to complete the filing, which included TurboTax Self-Employed for $114.99 and $44.99 to file Virginia state taxes, ProPublica stated.

When they tested the Free File version, there was no charge even though the filing information was identical.

These are not isolated incidents, but Intuit declined to comment, ProPublica said.

Jennifer Davis, government relations deputy director of the National Military Family Association told ProPublica, “As an organization dedicated to improving the well-being of military families, we are concerned that many military families have fallen prey to these fraudulent actions as well.”

Liz Zimmerman and her husband, who is a Navy chief petty officer in Iowa, found out the hard way.

She prepared their taxes using the TurboTax site and when she was done, TurboTax charged her $60 for something that should have been free since the family income is below the required guidelines.

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“I’ve got a kid in braces and I’ve got a kid in preschool; $60 is half a week’s worth of groceries. Who needs date night this month? At least I filed my taxes,” she told ProPublica.

Intuit spokesman Rick Heineman told ProPublica, “Intuit has long supported active-military and veterans, both in filing their taxes and in their communities, overseas, and in the Intuit workplace. Intuit is proud to support active military, including the millions of men and women in uniform who have filed their tax returns completely free using TurboTax.”

In a press release just this year, Intuit said TurboTax offers free filing for Military E1- E5, but it says nothing on the website about the option to free file, instead referring customers to TurboTax Military.

Navy Petty Officer Laurell falls below the income bracket to qualify for free filing but said he was charged $95 this year and $100 the year before. “I am upset and troubled that TurboTax would intentionally mislead members of the military,” he told ProPublica.

Six months after TurboTax first launched the Military Edition in 2012, Brad Smith, who was then the CEO for Intuit said, “We saw double-digit growth this season from the military and digital native customer segments. Given our scale and our data capabilities, we plan to extend this advantage to even more taxpayers next season.”

Smith now serves as the executive chairman of Intuit’s board.

ProPublica said that Intuit refused to comment on a recent lawsuit filed last week by Marine Laura Nichols who was charged by TurboTax even though she qualified for free filing.