Thursday, November 15, 2007
A Phialdelphia law firm on Monday filed a class action lawsuit in federal district court in Pennsylvania seeking over $1 billion in damages against the Free File Alliance and several of its members (including Intuit (maker of the TurboTax tax preparation software) and H&R Block (maker of TaxCut)) on behalf of the 70 million taxpayers with incomes over $52,000 who e-filed their tax returns. From The Legal Intelligencer:
The complaint was brought under the Federal User Charge Statute and alleges that the alliance members charged fees solely based on their private business interests and not on the value to the taxpayer and the public policy interest served. The sole count of the complaint was for restitution of fees charged for electronic tax filing in violation of the Independent Offices Appropriation Act. ...
"The name 'Free File Alliance' is clearly misleading," [Feldman, Shepherd, Wohlgelernter, Tanner & Weinstock] attorney Thomas More Marrone said in a statement. "Few taxpayers are actually eligible for free electronic filing. E-filing has become an enormous profit center for cartel members." ...
"This agreement wrongfully 'privatized' the IRS' quintessential government task of developing, receiving, collecting and processing tax returns, allowing [alliance] members to reap profits by charging taxpayers and tax preparers substantial and legally unauthorized fees to electronically filed returns with the IRS," the complaint alleges. Marrone said the proposed class calls into question all fees associated with e-filing, including the fees to file and the cost of purchasing the software for tax return preparation.
A spokesman for the alliance, Patrick Dorton, said in a statement that the lawsuit was without merit. ... "The Free File Alliance, which has been authorized and approved by the IRS and Congress, is a pro-consumer public-private partnership that has allowed more than 17 million taxpayers, most with low and moderate incomes, to file tax returns at no charge," Dorton said. "It has been a win for taxpayers and a win for consumers."