Intuitlast year that versions of TurboTax for the 2002 tax year and beyond would employ "product activation," a controversial but technique used by software companies to lock a copy of a program to a specific PC.
But current and former TurboTax customers are complaining in online forums such as FatWallet and in user ratings at online store Amazon.com that the technology is hampering their use of the software and is prompting them to consider alternatives, most notably H&R Block's TaxCut. Intuit representatives say most of the reports are baseless.
Complaints center on potential problems in getting TurboTax to run after changing PC or PC components. They also focus on concerns that years from now taxpayers who need to retrieve information from previous years won't be able to get older versions of TurboTax to run.
Lee Boszak, a retiree from Inverness, Fla., said he's used TurboTax for more than 10 years but switched to TaxCut this year because he objects in principle to product activation. "If I upgrade to a new PC or replace my hard drive, I can't install or reinstall without calling Intuit," he said via e-mail. "I have purchased TurboTax for many years, since it came on floppies--this activation is a slap in the face to a loyal customer."
Intuit spokesman Scott Gulbransen said the vast majority of concerns are based on misunderstandings about Intuit's use of product activation. Unlike the product activation process that Microsoftfor its Windows XP operating system, Intuit's software doesn't record any information about the PC that TurboTax is installed on.
Instead, customers are assigned an activation number from Intuit, either by the Internet or phone, when they install TurboTax. The activation number is tied to the product "key" for that particular copy of TurboTax. Anybody who tries to install the software using that product key after it has already been activated using the number will be refused and invited to purchase a valid license.
In most cases, customers who need to reinstall TurboTax on a new PC or hard drive simply have to enter the original activation number they received, Gulbransen said.
"Product activation does not prevent people who want to upgrade their equipment or have to deal with a hard drive crash from changing their hardware," he said. "We've heard from people who installed TurboTax right away and then got a new PC for Christmas. For most people, they can reactivate the product without even contacting us."
The same will hold true in future years if a customer needs to fire up an older version of TurboTax, he said. "The bottom line is, if you hold on to your activation key and product key, and you aren't going to have a problem," Gulbransen said. "That's why we're suggesting that people keep those numbers with the product disc in the same place they keep a copy of their printed tax return from that year."
But TurboTax user Joel Bradford, an educator from Eugene, Ore., said it wasn't that easy for him when he switched PCs last month. After removing TurboTax from his old PC, he was unable to reinstall it on the new one, and Intuit customer support offered no help.
"I tried contacting Intuit through the online tech support," he said in an e-mail interview. "The...representative was nice enough, but he offered no other solution than for me to buy a new license. I had the same experience with the senior support person (telling me) that I need to buy another license."
Customers are also complaining about Safecast, the Macrovision security software Intuit uses to verify activation numbers. Reports have surfaced in discussion groups and some news sites classifying Safecast--also known as C-Dilla for the company that provided the technology to Macrovision--as "spyware," programs surreptitiously installed on a PC that track and report how the PC is used. Spyware programs such as Gator and Brilliant Digital havegrowing concern among PC users.
"I have used TurboTax for eight years, but this year they have used a highly intrusive, insidious spyware/registration/copy protection scheme called C-Dilla," said a user in a comment on Amazon's product page for TurboTax Deluxe. "They don't tell you they're going to install it, there is no option not to install it, and there is no way to get rid of it...I won't let it on my computer."
But Gulbransen said the complaints are unfounded. "The whole C-Dilla flap is based on misinformation," he said. "It's never been spyware; it has no spyware components. It doesn't monitor anything; it doesn't tell us anything about the user, their system, their PC activity. It just checks on the random number generated when you activate the product."
Michael Glass, senior product marketing manager at Macrovision, said Safecast simply checks for a valid license file when a program is launched.
"It's absolutely, categorically false to call this spyware," Glass said. "We don't send any information about the user's system to either ourselves or the software publisher. We don't monitor what you download, which Web sites you visit, or anything like that."
Glass invited skeptics to use firewall programs or other security software to monitor what Safecast-enabled applications are doing with their Internet connection. "If people don't believe us, you can take an application like ZoneAlarm and see that it's not passing information back and forth to us or anyone else."
While Gulbransen said Intuit isn't concerned about losing sales due to the activation dispute, the company has compiled an extensive online FAQ about product activation in hopes of debunking common complaints.
Competitor H&R Block doesn't use any type of activation technology for its TaxCut software and has not made any definite plans on whether to do so with future editions, said Chrys Sullivan, the company's director of software products.
"We think it's an interesting development in our industry," she said. "We're watching this closely to see how the industry reacts."
Sullivan added that H&R Block has given customers a legitimate way to use a single copy of TaxCut on multiple PCs with a new "platinum" version that comes with a license allowing multiple installations in a single household.
"We listened to our customers and we know that a lot of them want to be able install the software on multiple computers in the same household," she said. "We're glad to be able to accommodate that."