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Intuit Beats FTC In Court, Ending Restrictions On 'Free' TurboTax Ads (arstechnica.com) 59

Posted by BeauHD from the just-in-time-for-tax-season dept.
An anonymous reader quotes a report from Ars Technica: An appeals court invalidated the Biden-era Federal Trade Commission's attempt to punish Intuit for allegedly deceptive ads that pitched TurboTax as free. Under then-Chair Lina Khan, the FTC determined in 2024 that the TurboTax maker violated US law with deceptive advertising and ordered it to stop telling consumers, without more obvious disclaimers, that TurboTax or other products are free. The FTC's chief administrative law judge had previously found that Intuit's ads violated prohibitions on deceptive advertising because the firm "advertised to consumers that they could file their taxes online for free using TurboTax, when in truth, for approximately two-thirds of taxpayers, the advertised claim was false."

Intuit appealed in the conservative-leaning US Court of Appeals for the 5th Circuit and got a resounding victory on Friday in a 3-0 ruling issued (PDF) by a panel of judges. "Following the Supreme Court's decision in SEC v. Jarkesy, we hold that adjudication of a deceptive advertising claim before an administrative law judge violated the constitutional separation of powers," the 5th Circuit panel said. The Supreme Court's June 2024 ruling (PDF) in Securities and Exchange Commission v. Jarkesy held that the SEC system for issuing fines violated the right to a jury trial. The 5th Circuit panel said the Jarkesy decision confirms that the FTC must pursue deceptive advertising claims in courts rather than its own administrative process. [...]

The 5th Circuit ruling acknowledged that most people can't use TurboTax for free. "TurboTax 'Free Edition' has been part of the TurboTax range for more than a decade, available to taxpayers for what Intuit refers to as 'simple tax returns,'" the ruling said. "Most American taxpayers do not have 'simple tax returns.' The TurboTax website is designed so that any individual taxpayer can begin preparing a tax return in TurboTax Free Edition, but those who enter disqualifying information are prompted before filing to upgrade to a paid product." Although the court noted that Intuit stopped the specific ads challenged by the FTC, the ruling said the cease-and-desist order issued by the agency could have far-reaching effects on Intuit marketing. "The cease-and-desist order is remarkably broad: it prohibits Intuit for the next twenty years from advertising 'any goods or services' as free unless specific, extensive, and arguably unworkable requirements are satisfied. The order is not confined to tax-preparation solutions and extends to all products sold by Intuit," the ruling said.

The 5th Circuit said the FTC's deceptive advertising claims are "traditional actions at law and equity and thus involve private rights that demand adjudication in an Article III court." The court rejected the FTC's argument that the claims involve public rights that may be adjudicated by administrative agencies. "In sum, there is overwhelming evidence that Section 5 of the FTC Act did not create a new duty for merchants to refrain from deceptive advertising," the 5th Circuit said. "That duty long predated the FTC Act and could be enforced by private parties in actions at common law or equity for fraud, deceit, or unfair competition."
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Intuit Beats FTC In Court, Ending Restrictions On 'Free' TurboTax Ads More

Intuit Beats FTC In Court, Ending Restrictions On 'Free' TurboTax Ads

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  • fine I will take my free item from an store and let the jury be the judge of if that is shoplifting or not

    • Don't you mean "let the judge and jury decide"? Which, yes, is exactly what happens.

  • Summary: TurboTax is not innocent per se (Score:5, Informative)

    by UnknowingFool ( 672806 ) on Tuesday March 24, 2026 @11:09AM (#66058784)
    The FTC in their own processes ruled that TurboTax claiming that their tax preparation services were "free" was deceptive in that 2/3s of people could not get the free service. The US Court of Appeals for the 5th Circuit said that procedurally the FTC had to get that ruling through the courts rather than their own administrative processes. So the claim that it was a "resounding victory" is a bit exaggerated as the "5th Circuit ruling acknowledged that most people can't use TurboTax for free. "

    • Re:Summary: TurboTax is not innocent per se (Score:5, Insightful)

      by Knightman ( 142928 ) on Tuesday March 24, 2026 @11:34AM (#66058840)

      This is just another outcome that makes federal agencies more powerless to do what they were created to do. Funny how the established precedent in Atlas Roofing Co. v. OSHRC that has held for over 40 years that congress can delegate enforcement to agencies without the need for a jury became burdensome lately when it started interfering with the bottom-line for duplicitous companies.

      • Re: (Score:2, Informative)

        by schwit1 ( 797399 )

        It is NOT what they were created to do. The agencies were not created to be judge AND jury.

        • If your statement is true that means the agencies have been redundant for decades and their existence was pointless.

          • If your statement is true that means the agencies have been redundant for decades and their existence was pointless.

            That seems to be the take that certain segments of the political class want people to come away with. It just depends on who among them you're talking to whether the power those agencies held should be handed to the judiciary, or the president. Congress? Heh. Even Congress doesn't care if Congress ever has any power again.

          • They should be done away with. The ability for unelected bureaucrats to create and enforce law is unconstitutional. We elect legislators for that purpose and they shouldn't be able to rely on unelected bureaucracies to do their job either because the effect has been that they all throw their hands up as though they can do nothing while allowing these unelected bureaucrats who do not have to ever face the voters to act as they please.

            If these agencies have recommendations they can make them to Congress li

            • "The ability for unelected bureaucrats to create and enforce law is unconstitutional."

              They can not, are not, and have not been doing that. You don't know what the words you are using mean.

            • Re: (Score:2)

              by linuxguy ( 98493 )

              > The ability for unelected bureaucrats to create and enforce law is unconstitutional. We elect legislators for that purpose..

              Are you sure that the legislators are supposed to enforce the law? And also are you conflating creating the law with interpreting the law?

            • They should be done away with. The ability for unelected bureaucrats to create and enforce law is unconstitutional. .

              I agree. https://www.supremecourt.gov/ [supremecourt.gov]

            • Re: (Score:3, Interesting)

              by nmb3000 ( 741169 )

              Tell us you don't understand how the government works without telling us you don't understand how it works.

              Congress has the power to delegate it's authority to smaller expert groups. Passing a law that says "The FTC can set rules for trade and commerce in these ways..." is completely valid. Or sure, we could have Senator "series of tubes" Stevens write every single specific rule that controls Internet communications. That will work fine.

              There are only two groups of people who want to eliminate regulatory

        • So why did congress invest that power in them, something they have been doing it for a very long time now?

          Are you also aware that breaking federal regulations usually fall under federal civil law, right? In federal civil cases juries are rare and only when there are monetary damages on the table. An administrative judge telling companies to "follow the regulations and don't fuck over the public" doesn't seem to involve monetary damages what so ever from what I can see, which is why the 5th circuit shoehorne

      • The ads for "free tax prep" have a little asterisk at the end... it's all spelled out in the EULA and TOS... Free Basic tax filing.
        It becomes 'not free' when you add something (start adding Schedules, or non-standard forms or W-2s or situations.

        I just feed it the info, download the PDF, mail it in with photocopies as needed of stuff.

        • Re: (Score:2)

          by dgatwood ( 11270 )

          The ads for "free tax prep" have a little asterisk at the end... it's all spelled out in the EULA and TOS... Free Basic tax filing. It becomes 'not free' when you add something (start adding Schedules, or non-standard forms or W-2s or situations.

          I just feed it the info, download the PDF, mail it in with photocopies as needed of stuff.

          When almost two-thirds of users have to use one "non-standard form", your definition of standard is not plausible.

          Sold stocks? Not free. Have any sort of retirement account that sold stocks? Not free. Have high state taxes and need to itemize? Not free. Received unemployment benefits? Not free. Did any freelancing for any gig economy company? Not free. Have an HSA because of a high-deductible insurance plan? Not free.

          I'm actually surprised that a third of people qualify. You basically have to ha

      • Re: (Score:2, Informative)

        by sabbede ( 2678435 )
        No, it means they can't be the cops, judge and jury. They were never supposed to be, and Congress had no authority to delegate judicial powers to the executive branch. At least that's how I see it, and it seems how the 5th circuit sees it.

        Just think about it. We have an independent judiciary. If you are charged with breaking a law, you and the people who say you broke the law stand before an independent judge and a jury of your peers. Unless the FTC, SEC, or whichever federal agency says you broke a

        • Do someone need to explain the difference between laws, regulations and what is considered civil and criminal offenses so you can get up to speed how federal agencies have operated for 200+ years? It's amazing what isn't taught in schools anymore, like basic civics and how federal agencies actually work. Civil cases don't have juries because the norm is that there are no monetary damages awarded, just remedies that the defendant has to implement so they are in compliance with laws and regulations.

          If you get

          • Civil cases often don't have juries (they always have judges), but monetary damages are common. Hell, that's what they're mostly used for! For example, personal injury suits. Land and title disputes, defamation, breach of contract... If your neighbor is spewing toxic fumes, you sue him and seek financial recompence for the damage caused to you and your property.

            In the previous mentioned case where SEC damages were struck down, it was because fines were imposed and the Courts weren't involved. In this

    • Correct. The court simply said that FTC has to sue in court, not issue fiats and fatwas.

  • Such as freetaxusa. Search around. Turbotax is so lame and overpriced. Rant: we should just have some basic withholding percentage, tariffs, and then a similar basic flat percentage from all corporate revenue. No funny deductions, no net profit games, just revenue almost like a federal sales tax. IMHO if these were some reasonable level it'd be fine, we could then fund the rest on deficit spending (like we're so prone to do anyways.)

    • Good call. I made this jump this year and am never looking back.

    • I have been using olt.com for years now. My taxes are not very complicated but last year I had a couple of 1099s and some other stuff and it worked OK. It's a very simple site (that is, it doesn't have a bunch of singing and dancing bullshit) and they send me one email per year to remind me that they exist around tax time. If your income levels are not very high (and mine are not) they will e-file your federal and state taxes for free; otherwise, they will generate forms for free, and you can mail them in.

      A

  • This is just about what venue the FTC needs to use to prosecute its case.

    • Unfortunately this administration is unlikely to pursue the case further.
      • Well, what we really need is for Congress to change the law so that the IRS can pre-fill your tax forms so all you have to do is make sure it's right. Do that and it won't matter what Intuit says.

  • You're the meat, and deceptive advertising is the lure.

    • Re: (Score:2, Informative)

      by sabbede ( 2678435 )
      No, this just means the FTC has to actually take Intuit to court, they can't decide on their own that Intuit broke the law and then issue a punishment. And I'll bet that's how you think it should be too.

      Think about getting pulled over by a cop. What if when he came to your car window, he said you were guilty of breaking the law and would have to pay a fine or lose your license. No trial, no judge, no jury, just a cop deciding you broke the law and have to pay. I suspect you would be unhappy about this

      • That's just how a corporate controlled system wants it. Fight every thing in court, when you have an army of high-paid lawyers up against public servants on a much more limited salary. Frankly we should not be surprised that an agency that is charged with regulating business does not actually have any authority to regulate business.

        I am generally happy when my individual rights are respected. But I don't equate corporations to being individuals or deserving of the same rights. I don't even consider innocent

        • Our Constitution set up a system where things are fought in the courts. It is a good idea. And don't make the mistake of thinking the government doesn't have more resources to throw at a case than any private entity does.

          You don't like corporations, fine. Your opinions regarding their legal personhood or that "innocent until proven guilty" doesn't apply are irrelevant, as those are both established legal principles that the court treats as foundational truths. So, whether you like it or not, they do

          • And don't make the mistake of thinking the government doesn't have more resources to throw at a case than any private entity does.

            Legislature and Executive branches intentionally hamstring our institutions because some key people in power want to raid the wealth of our nation and bring about the downfall of our society.

  • Seems like a fairly trivial decision tree for a modern LLM to navigate. 99% of taxes amount to half a dozen forms to fill out. Add, subtract, multiply. Annoying and time consuming for a human but there arent any nuanced decisions unless you’re a fairly large business or have a really complex investment portfolio. Those people were always gonna use pros, anyways.
    • What really ticks me off is how Intuit and H&R Block lobby like crazy to keep our taxes stupid. Why the hell do I have to do the Federal government's accounting when they already have all the information and could have sent me a pre-filled form to doublecheck? Screw you Intuit, just stick with Quickbooks.

    • Re:Can chatgpt do taxes? (Score:4, Insightful)

      by slipped_bit ( 2842229 ) on Tuesday March 24, 2026 @12:39PM (#66059048)

      Me, after getting out of prion for tax evasion: "ChatGPT, WTF, bro? The return to filed for me got me sent to prison!"
      ChatGTP: "Whoops, you're right, man. My mistake. Let me fix that."

  • Advertising is always a lie, marinated in just enough misdirection to suggest hope that there is value for the customer.

  • Inuit needs to be buried as a company (Score:3)

    by wakeboarder ( 2695839 ) on Tuesday March 24, 2026 @12:53PM (#66059088)

    They are like a leech on the tax system and they somehow reattach themselves each time the government trys to get them off

  • If you weren't aware, they were caught targeting disabled, veteran, and other similar groups with their advertising campaign, knowing they were not eligible for the simple, free return. So it was a scam and they already paid a huge fine for that one in the past.
  • No lawsuit necessary. Proper agency response and billions of taxpayer-savings: "Not as free as our new Free Taxpayer Filing System Like Every Other Civilized Country." (Except freakin' Canada where TurboTax and H&RB have extended their claws).

    • Re: (Score:2)

      by PPH ( 736903 )

      if we had free filing

      We do, almost. Print the return, stuff it in an envelope and send it in. Only cost: the stamp.

      IRS doesn't like the workload? Then do something about it. One could do as I do. Fill in the forms longhand. Sorry about the Parkinson's. Say, that wouldn't by any chance be deductible, would it?

      • We do, almost. Print the return, stuff it in an envelope and send it in. Only cost: the stamp.

        IRS doesn't like the workload? Then do something about it. One could do as I do. Fill in the forms longhand. Sorry about the Parkinson's. Say, that wouldn't by any chance be deductible, would it?

        Don't forget to deduct the cost of the stamp next year :-)

  • Why is the tax code so complicated that we need software like this in the first place, and why arenâ(TM)t we pushing to make it simpler?

    • We did. The IRS released their own tax software to make things easier and free. A few states were able to try it out last year. It worked. Republicans killed it.

  • TurboTax is so annoying. It doesn’t ever technically lie to you about all its useless add-ons. But, I wonder how much time the engineers spend creating a good tax filing product (making it easy to use, keeping up to date with new laws, forms, etc.) vs tweaking the hell out of the workflow to subtly (and not so subtly) guide you into giving them more of your money. Yes, I know: capitalism! I’ve got no issue with them turning a profit. I do have an issue with them clearly using various bits of

  • That simple. The only people who care about this are people that can afford to pay an actual tax accountant and not a guy sitting in a Walmart. The people who don't care are the ones who cant afford these things. It's like a fishing hook in the water, its there but you don't have to bite it.
  • This more than ignoring the authority already given by US congress to regulatory agencies, it's normalizing the authority of corporations. Corporations are not people, they do not have rights that the law must protect.
  • Because the government mafia will protect a monopoly on the complicated extraction of money from you to be ruled by tyrants who celebrate the killing of little brown children around the world. Maybe consider withholding federal taxes this year instead of marching on one Saturday every few months for a participation prize.

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