4 days ago
Intuit offers to pay interest, penalties for Ontario families affected by TurboTax snafu
Intuit Inc. INTU-Q is offering to reimburse Ontario families affected by an issue with its TurboTax software for interest and penalties imposed by the Canada Revenue Agency.
Many working parents with young children in Ontario say they face thousands of dollars in overdue taxes and interest after they incorrectly claimed the province's child care tax credit using TurboTax, in some cases for several years.
In e-mails sent to affected customers this week, U.S.-based Intuit said it would cover the cost of interest and penalties as a 'gesture of good will,' even though the problem isn't related to a tax calculation error by its software. The company also reiterated a previous offer to reimburse users for the cost of the tax-filing program.
'We value our customers, and we have listened carefully to the concerns expressed,' Rick Heineman, vice-president of communications at Intuit, said via e-mail.
But some users wonder whether accepting the money will affect their ability to participate in a proposed class-action lawsuit against Intuit and its Canadian subsidiary.
Andrew Van Vroenhoven, of Whitby, Ont., said his family is being asked to repay around $21,000 in taxes and interest. He called Intuit's decision 'a step in the right direction.' But also said he would need more information before deciding whether to take Intuit up on its offer.
Mr. Van Vroenhoven, who has three children under the age of 13, including one with a severe disability, also said he wasn't sure whether he and his wife could or should take the cash since they have applied for interest relief from the CRA.
At the centre of the controversy is a counterintuitive set of prompts in a desktop version of the TurboTax software meant for advanced users. According to materials reviewed by The Globe, the program is designed to apply by default for the Ontario tax credit based on the income of the lower-earning parent. But the software does not also automatically account for the income of the second parent, which users must type in manually, if applicable.
Without adding the earnings of a second eligible parent, a family can receive amounts of the Ontario child care tax credit to which they aren't entitled.
Until recently, the program also failed to alert users to the possible, costly mistake. TurboTax usually highlights potential issues that require additional review before customers file their tax returns. But for tax years prior to 2024, the advanced desktop version of the program didn't flag their Ontario child tax credit claim even if the users' combined income was higher than the maximum eligible for the credit.
The Ontario tax credit allows families with a household income of up to $150,000 to claim part of their annual child care expenses. Eligible recipients can get up to $6,000 for each child under the age of seven, up to $3,750 per older child up to the age of 16, and up to $8,250 for a child with a severe disability.
Many TurboTax users in Ontario said they recently received reassessments from the CRA related to the tax credit, including thousands of dollars in interest on their tax debt.
Intuit had previously declined requests to pay for users' interest and penalty charges, saying they didn't qualify under its accuracy guarantee policy, which only covers issues caused by calculation errors.
Mr. Heineman reiterated on Thursday that the child credit issue does not fall under the terms of that guarantee. However, he said, Intuit had decided to reimburse affected customers 'in recognition of the inconvenience this situation may have caused.'
The move comes after London, Ont.-based law firm Foreman & Company filed a proposed class action lawsuit against Intuit over the child credit issue in Toronto on May 5.
'The concern is that when a company like Intuit goes out directly to consumers with what is effectively a legal offer, something that affects their legal and practical rights, there can be a lot of confusion and a lack of clarity around what it means for their rights,' Jonathan Foreman, founder and partner at the firm, said.
Mr. Heineman said Intuit won't ask customers who accept the reimbursement to sign any releases related to the proposed class action.
However, he added, the goodwill offer 'is not an admission of any fault, error, or liability on the part of Intuit.'
