By Jonathan Stempel
March 20 (Reuters) – A U.S. appeals court on Friday threw out a Federal Trade Commission order barring TurboTax maker Intuit from advertising its popular tax preparation software as “free” when many taxpayers are ineligible.
In a 3-0 decision, the 5th U.S. Circuit Court of Appeals in New Orleans said it violated the constitutional separation of powers for an FTC administrative law judge to decide a deceptive advertising claim.
Intuit had been appealing a January 2024 FTC order, which followed an earlier ruling from an administrative law judge, barring it from marketing any service as free unless it was free to everyone, or the company clearly disclosed what percentage of taxpayers qualified.
The FTC said Intuit deceived consumers during six years of marketing into believing all TurboTax products were free, with some ads saying TurboTax was “free, free, free, free.” It called the character of the Mountain View, California-based company’s violations “egregious.”
Intuit had advertised its TurboTax Free Edition across a variety of media, but usually said the product was free only for taxpayers with “simple” returns.
Circuit Judge Edith Jones wrote for the appeals court that the FTC case belonged in federal court, where the agency may face a higher burden of proof.
She cited a 2024 U.S. Supreme Court decision curbing the Securities and Exchange Commission’s use of in-house judges to enforce laws.
Neither the FTC nor Intuit immediately responded to requests for comment.
(Reporting by Jonathan Stempel in New York; Editing by Mark Porter and Diane Craft)
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