TurboTax error affected more than 12,000 Oregon tax returns; fix is coming
Published 7:00 pm Saturday, May 4, 2024
SALEM — TurboTax says mistakes by its tax preparation software affected more than 12,000 Oregon tax returns, incorrectly directing them to take the state’s standard tax deduction in cases when people could save money by itemizing their deduction.
Intuit, the Silicon Valley company that owns TurboTax, hasn’t addressed the problem publicly and didn’t respond to questions again Thursday, May 2.
But in emails to the state, reviewed by The Oregonian/OregonLive, the company said it has a fix in place and will soon begin notifying customers about how to amend their returns and reduce their tax bill.
It’s not clear how much money Oregonians overpaid as a result of the TurboTax error. Some tax filers told The Oregonian/OregonLive that the mistake directed them to pay several hundred dollars more than they actually owe.
If so, that means TurboTax could have cost Oregonians millions of dollars in tax overpayments altogether.
“Fixing this error will require identifying all affected Oregonians, notifying them, and ensuring they can be made whole,” U.S. Sen. Ron Wyden wrote in a letter to Intuit.
Wyden, D-Oregon, asked the company to explain what steps it takes to test its software and what went wrong in this case. And he called on Intuit to issue refunds for the cost of its software to Oregonians affected by the mistake, citing TurboTax advertising that promises refunds to customers who get larger refunds from an alternative tax preparation method.
“Intuit has a history of deceptive advertising, but I expect it to make good on this guarantee,” Wyden wrote. He noted that the Federal Trade Commission found in January that TurboTax had engaged in deceptive advertising when it promised “free” tax services to some customers.
Nearly all the people affected by the mistake were using TurboTax’s desktop software, Intuit told the Oregon Department of Revenue, instead of its online service. The company said it has identified electronic filers who were affected but is still sorting out who was affected among customers who used its software and then mailed in paper tax filings.
Intuit said it is preparing a notice for taxpayers “with guidance to amend, fix and re-file their return.”
Oregon officials notified Intuit of problems with TurboTax’s software in early April, ahead of the tax deadline, according to public records. Intuit initially said it couldn’t duplicate the issue Oregon officials found.
The company acknowledged the problem this week after fresh inquiries from the state and The Oregonian/OregonLive.
Tax filers can reduce their tax bill by deducting charitable contributions, business expenses, mortgage interest payments, medical expenses and other items.
But itemizing expenses is only advantageous if the size of those deductions is greater than the standard deduction. Oregon’s standard deduction was $2,605 for single filers last year, or $5,210 for married people filing jointly. (Some classes of filers had different standard deductions.)
TurboTax directed some Oregonians to take the standard deduction even when the itemized deduction was larger.
In emails to Oregon officials over the past week, Intuit representatives didn’t explain how the TurboTax mistake happened or why the company didn’t catch it even after the state notified them of a potential issue.
But an Intuit representative apologized twice “for the inconvenience this is causing.”