Tax preparation companies H&R Block and Intuit, which makes TurboTax, were sued Monday for allegedly making their free tax filing tools hard to find.
Taxpayers with incomes below $66,000 are eligible to file their taxes for free as part of a partnership between the Internal Revenue Service and Intuit, H&R Block and other companies. Under the agreement, the IRS has agreed not to make online tax filing free as long as the tax-preparation companies provide the service.
Still, only 3% of Americans reportedly file their taxes for free every year, and locating those services .
Last month, ProPublica reported that searches for terms like "irs free file taxes" directed people to paid versions of Intuit's service. Free options were tough to pin down, according to the report.
In the suit, Los Angeles City Attorney Mike Feuer said TurboTax and H&R Block have used "deceptive and misleading advertising and design schemes" to lead taxpayers to unnecessarily purchasing their products. He added that the companies have "for years defrauded the lowest earning 70 percent of American taxpayers ... by actively undermining public access to the IRS' 'Free File' program."
For years, Intuit and H&R Block have lobbied to block the IRS from building its own free online tax filing system because it would compete with their products, according to ProPublica. Congress members have reportedly pushed to keep the IRS from providing free online filing.
"Any suggestion that Intuit does not support the IRS Free File Program is flat wrong," said TurboTax spokesman Rick Heineman. "We stand behind our actions as being both appropriate and consistent with our values."
An H&R Block representative said the company has "helped millions of Americans" with its free tax filing options, adding that use of its Free File program grew 8% this tax season.
You can read the lawsuits against Intuit and H&R Block below: