Are you familiar with Wayne Static’s quote that, “Nothing in life is free. You end up paying in the end.”
Consumers who may not have been familiar with that quote may have learned the reality of it the hard way. Particularly if those consumers were lured by a tax preparation company’s ad campaign of “Free, free, free, free” where that was essentially the only word spoken.
In an age where DIY tax preparation has become more accessible than ever, a certain tax preparation software company has captured the attention of consumers through their enticing “free” message. But according to a ruling by the Federal Trade Commission (FTC), it suggests that there may be more to “free” than meets the eye.
Upon further examination, it seems that TurboTax’s definition of “free” may not align with consumers’ expectations of “free”. “According to the Administrative Law Judge, Intuit deceived consumers with its bogus “free” filing claims, given that approximately 100 million people – about 2/3 of filers – didn’t qualify for “free” filing.” The FTC’s recent initial decision highlights the following key issues:
1. Hidden Fees: For many taxpayers with more complex financial situations, certain forms and features are required. In which case, customers often find themselves pushed toward paid versions, resulting in additional costs that were essentially hidden from their original marketing campaign.
2. Income Restrictions: The “free” option may have income restrictions that limit who can use it, excluding many taxpayers with even slightly more complicated returns.
3. Lack of Transparency: The FTC’s initial decision suggests that their advertising may not always provide the transparency needed for consumers to make informed decisions. Customers may not fully grasp the limitations of the free option until they are well into the filing process.
The FTC’s initial decision against Intuit TurboTax serves as a wake-up call for both them and the consumer. Although, ultimately it will be a win for the consumer since the FTC will ensure that the company be more forthright with their advertising in order to protect American consumers from deception.
To read the Federal Trade Commissions’ entire business blog, go to https://www.ftc.gov/business-guidance/blog/2023/09/nine-takeaways-initial-decision-intuit-turbotax-action
This situation highlights the need for consumers to be proactive and informed when selecting a tax preparation service. Taxpayers should take time to research and understand their options, read the fine print, and be prepared for potential upselling in the pursuit of a “free” tax filing experience.
If you already know that nothing in life is free and that you end up paying in the end, then you are one step ahead of those seeking the “freebie”. But it also makes sense to do your due diligence so that what you pay for is quality, reputable and suitable for your needs. Consider reading the following IRS article on “Tips on how to choose a reputable Tax preparer”: https://www.irs.gov/newsroom/tips-to-help-people-choose-a-reputable-tax-preparer
To learn more about tax preparation services offered by Saunders Tax & Accounting, visit https://saunderstax.com/taxprep.php. The office is open Monday through Thursday from 9 am to 5 pm and is available online at www.SaundersTax.com with extended hours offered January through April. Awarded the Hagerstown Chamber of Commerce “2023 Small Business of the Year”, we have been providing a Less Taxing Life and More Prosperous Solutions since 1984!