Did you know that H&R Block has a free filing program for persons who earn less than $66,000 per year? No? The complaint for this class action says that’s no accident. While the company is in the Free File Program, the complaint says, it deliberately hides that program from taxpayers and attempts to divert them to paid filing programs. The complaint claims that this behavior violates California laws, breaches contracts, and results in unjust enrichment.
The class for this action is all persons who, between May 17, 2015 and the present, paid to file one or more federal tax returns through H&R Block’s Internet-based filing system even though they were eligible to file those tax returns for free under IRS Free File.
Years ago, the Internal Revenue Service (IRS) wanted to offer taxpayers a way to do their taxes online for free. Needless to say, tax preparation companies were not happy about this. In 2002, the IRS decided to partner with some tax prep companies instead. The Free File Program makes all taxpayers with adjusted gross incomes below the 70thpercentile (at the moment, less than $66,000 per year) eligible for free filing.
The complaint says that, because H&R Block participates in the Free File Program, it is “required to make available free electronic tax filing services to certain eligible taxpayers and to refrain from marketing [its] commercial services in competition with the Free File program.”
Although H&R Block does offer such a program, the complaint says, the company is “affirmatively acting to hide that program from taxpayers and to divert taxpayers seeking free e-filing services into [H&R Block’s] paid programs.”
In fact, the complaint claims that the company “aggressively advertise[s], and direct[s] consumers to, a competing service … which is not the same as [its] True Free File Service and which is ultimately not free for most taxpayers.” This is intended to “ensnare” those looking for a free filing program. “At the same time, [H&R Block] take[s] steps to hide the existence of [its] True Free File Service, intentionally hiding it from search engines and depressing its search rankings. This is essentially a bait-and-switch scheme…”
Also, “[f]or those taxpayers who actually make it to the landing page for [H&R Block’s] True Free File Service, those over the age of 51 will find that they are generally ineligible” for that free filing service. However, H&R Block does not direct them to other Free Filing Programs that would actually let them file for free. Instead, the complaint says, they are led to believe they must pay to file their taxes.
The complaint says, “In pursuing this scheme, Defendants disregard (and intentionally violate) their agreement with the IRS…” It claims the deception violates California laws as well.