Two California residents have lost a suit claiming an Intuit fee for proposing electronically filed tax returns violated state laws. The suit by Tasha and Frederick Smith was dismissed by a judge who held they did not prove that Intuit's fee was a loan. They also did not show they suffered economic harm and therefore had no standing to bring suit under other laws cited.
The plaintiffs can amend their complaint under the ruling by U.S. District Court Judge Edward J. Davila. The suit is one of many claiming that fees by tax return processors and refund transfer checks all constitute loans that fall under laws regulating them.
The couple utilized Intuit's Refund Processing Option for electronic tax return preparation for tax years 2008, 2009 and 2010. That option creates a bank deposit account and once a refund is received by the bank, TurboTax fees and a $29.95 Refund Refund Processing Service fee are deducted from the refund.
The Smiths claimed the fee was contrary to three provisions of a California law governing Refund Anticipation Loans and that Intuit did not "disclose any interest rate or finance charge, failed to disclose the RPO as a finance charge, and failed to provide a clear, written disclosure containing the fee schedule", according to the court record. They also claim the fee violated state usury laws, the California Unfair Competition Law and False Advertising Law.
Davila held the fee was not a loan since Intuit did not give the Smiths money, but merely delayed the payment that came out of money provided through the refund from the Internal Revenue Services.
The judge said the Smiths failed to plead economic harm and therefore had no standing under the unfair competition and false advertising laws.
