The Los Angeles city attorney is filing a lawsuit against tax preparers H&R Block and Intuit for allegedly misleading low income tax payers. City Attorney Mike Feuer says tax prep companies went out of their why to hide access to free tax services.
"This is a situation where free should be free, but we allege the way these companies have structured their websites and misled consumers, free has turned out not to be free at all in so many cases," Feuer told NBC News. "We allege that these companies instead steered the low-income tax payers to paying for services that they didn't need to pay for."
Feuer says they "intentionally obscured and failed to disclose" the difference between the "Free File" program and paid products. The IRS requires firms to provide the "Free File" program for anyone with an income under $66,000.
Fewer than 2.5 percent of taxpayers use it and Feuer said part of the reason for the low participation is because tax preparers deliberately hide it so they can make a profit.
LA City Attorney Mike Feuer says tax preparers H&R Block and Intuit try to hide free tax services from eligible customers.
Propublica reporter Justin Elliott says he found some online tax preparers have been trying to hide free services that are available to low income customers.
Intuit pushed back against the claims by the city attorney's office. In a statement, the tax prep company said, "We stand behind our actions as being both appropriate and consistent with our values. Any suggestion that Intuit does not support the IRS Free File Program is flat wrong.
We are committed to offering Americans the ability to file their taxes for free, and we're committed to the IRS Free File program. More people have filed their taxes for absolutely free with TurboTax than all other tax prep software companies combined."
"We look forward to working with the IRS and private industry to improve the Free File program and help it continue to grow."
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