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Intuit Finds Customer Complaints Too Taxing to Endure

I'd like to think that nobody's worrying about doing their 2008 taxes yet. But a lot of people do pay attention to that task this early--so many that their protests forced tax-prep-software vendor Intuit to back down from a controversial pricing change last week.

The story began in November, when Intuit announced that the next release of its TurboTax software would charge an extra $9.95 for each return prepared after the first. Users noticed this change and were not amused. One wrote in an e-mail:

Thought you might be interested in learning, if you don't already know, that purchasers of Intuit's TurboTax for 2008 will now have to pay an additional $9.95 for each additional tax return they may want to do using the program, e.g., for a child or grandchild. This, on top of an almost 50-percent increase in the cost of the program (my TurboTax Deluxe cost me $63.55 this year compared to $47.20 last year.
Many took out their frustration on Amazon, where they pelted the product with hundreds of one-star ratings.

turbotax_reviews.jpg

Intuit's primary competitor, H&R Block, noticed this at some point--when a few Block reps stopped by my office to talk about their TaxCut program earlier this month, they repeatedly emphasized their program's lower prices.

For a while, Intuit seemed content to ride out the criticism. One Intuit publicist scoffed at Block's marketing strategy, Twittering that "Brands use price when they have nothing else."

By Thursday, though, Intuit had evidently had enough. It said it would make additional returns free and refund any fees customers had already paid. The company has since released additional details about the change, explaining that an upcoming software update to TurboTax will remove any mention of the $9.95 additional-return fee.

You don't see companies capitulate to their customers like this too often. But will Intuit win back everybody it had initially angered? You tell me: If you used TurboTax to file last year's taxes, will you return to it for this year's? How did Intuit's turnaround affect that decision?

By Rob Pegoraro  |  December 15, 2008; 9:42 AM ET
Categories:  Productivity  
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Comments

hmm... I can see where Intuit is coming from here since the value of the program originates from how many times you use it, not how many times you buy/install it. People have this conception, however, that when you buy and install software you should only have to pay once.

What Intuit should do instead is switch to a web service model where they can charge users per return prepared on their website, and people won't complain because they will recognize they are paying for use of a tax prep service, not unlimited access to tax prep software.

Posted by: divestoclimb | December 15, 2008 10:35 AM | Report abuse

how does intuit stay in business? They seem to come up with more customer-unfriendly business strategies every year. divestoclimb's point is fair, but intuit is constantly adding fees, having software deactivate after a few years, and failing to improve their products (hello, quicken for mac 2006).

Posted by: ah___ | December 15, 2008 10:37 AM | Report abuse

I agree with divestoclimb with respect to Intuit switching to a web-based service, but a this point they are marketing tax prep software, not a service, and people are right to be angry. This is 95% marketing and customer management, and they have failed miserably at managing consumers' expectations. At this point, I don't think the majority of consumers will know or care about this problem, but I suspect those that took the time to leave negative comments on Amazon and the like are gone for good.

Posted by: ohloma | December 15, 2008 10:57 AM | Report abuse

I wasn't aware of the pricing issue until I saw it here last week. Having been a TurboTax (earlier MacInTax) user for too long to remember I don't know that I would have changed even with what H&R Block is offering with TaxCut. Honestly, I think that the pricing change was reasonable and I am pretty sure that it would have actually cost me less this year given the number of returns that I do for my family.

Posted by: skipper7 | December 15, 2008 11:08 AM | Report abuse

And companies wonder why people pirate their software. Anyway, I usually wait until mid-January, when one of the big box retailers (last year it was Costco) has a sale on TurboTax, and they drop the price by half or more. I'm only preparing taxes for myself anyway, so an extra fee wouldn't affect me.

Posted by: nuttyturnip | December 15, 2008 11:40 AM | Report abuse

I dropped TurboTax when it added a copy protection scheme without informing customers that this scheme could never be erased from the HDD. (One of my computers still burps an error message as a result of uninstalling Quicken.)

Can't they make enough money using straightforward pricing?

Posted by: j_martens | December 15, 2008 11:43 AM | Report abuse

I could see paying $10 per return if they included free electronic filing of each return, but they don't. I would probably have stayed with them but done my kids' returns on line with one of the free services listed on the IRS website for taxpayers making less than a certain amount a year (I think its around $35K). Intuit's customer service has left lots to be desired over the years--I will only upgrade my Quicken program if it is offered free with TurboTax or at a very deep discount. Each new version only seems to strip out standard features and place them in a more expensive stratified edition (Starter, Basic, Deluxe, Platinum, Home & Office, etc)

Posted by: ramgut | December 15, 2008 11:45 AM | Report abuse

Intuit seems to be a company run with an MBA-inspired input output model. Over time they have become less customer friendly and more likely to pull stuff like this. I have a feeling that they looked at it and decided that on balance they would come out ahead with this pricing policy; too bad that they have competitors or they might have been able to get away with it.
Please come out with your annual comparison of tax prep software and from there I may change my mind after using TurboTax for a decade.

Posted by: ThomasFiore | December 15, 2008 12:24 PM | Report abuse

I'll probably use Turbotax this year for the same reason as I used it last year: all the alternatives are no better and the tax codes are so complicated the mere thought of doing them by hand gives me a headache.

I read Intuit's explanation for the price change last week and while they have a point, only people who e-file will benefit. Others are forced to pay for e-filing even if they don't want it. It's like a company giving you a mandatory 3 for the price of 2 deal. It's great if you need 3 or 2 but sucks if you just want 1.

Posted by: tundey | December 15, 2008 12:36 PM | Report abuse

I'm an American living in Australia.

The Federal government here supplies free software to file electronically every year, with direct deposit into your bank account.

We generally get our refund in less than 10 days from filing - now THAT is TurboTax!!

Even Block-heads can Intuit that this is a deal that makes sense.

Posted by: pagun | December 15, 2008 1:10 PM | Report abuse

"I agree with divestoclimb with respect to Intuit switching to a web-based service, but at this point they are marketing tax prep software, not a service, and people are right to be angry. This is 95% marketing and customer management, and they have failed miserably at managing consumers' expectations."

Well put ohloma.

What really concerns me: Rob, were you actually subscribed to the twitter acct of a random PR person for Intuit? Did you find out after the fact? Exactly how many twitter messages do you read a day? Is it as annoying as it sounds?

Twitter is quite the curiosity. I don't care enough about the two sentence thoughts people have to sign up. It's just astonishing how many people actually DO care about such banality.

For Rob's purposes, being signed up to get stuff from PR people makes sense, but how much junk does one have to sift through to get a decent tidbit?

Ended up going slightly off topic there...sorry!

Posted by: hokiealumnus | December 15, 2008 1:31 PM | Report abuse

I stopped using TurboTax and Intuit products many years ago as their support decreased to nothing. They don't seem to care about their users, just their money. Why bother with them when there are alternatives that work just as well. At this point, the only differential is the pricing and the alternatives are cheaper.

Posted by: garyp0 | December 15, 2008 1:32 PM | Report abuse

I switched from TurboTax to TaxCut the last time Intuit tried something like this (an intrusive and cumbersome copy protection they added for a year), and I never switched back.

Consider that a data point.

Posted by: ThisSpaceIntentionallyLeftBlank | December 15, 2008 2:12 PM | Report abuse

ignorance and apathy = a sure recipe for failure. I don't "have" to buy Turbo Tax, there are other options.

Posted by: jimbo1949 | December 15, 2008 2:28 PM | Report abuse

I won't be using Turbo Hack this year after what I went through last year. The program was suppose to be able to install from the disk but I have yet to get a disk that my MAC can actually read. This after many calls to their WONDERFUL ENGLISH AS A (maybe) SECOND LANGUAGE TECH SUPPORT reassured me that it was on the disk. After three tries I was allowed to download the program from their website but this was after many hours of wasting my time.
I actually think that I could have done everything on a paper form as just as fast when you take into account my wasted time dealing with their tech support.

I lost my trust with them.

Posted by: edeckel | December 15, 2008 4:05 PM | Report abuse

Intuit seems to be just another big company that has outgrown it's pants. On another issue, just as bad that will add to their ruination - Their product Quicken: Nearly 2 years ago they were alerted that printing (reports and checks) was disabled by the release of MS Vista-64 bit with any version of their software, even the latest 2009 version. They deny that it is their problem claiming it is either MS/Vista, printer manufacturers' drivers, or end users. Meanwhile, many customers are simply out of luck and will jump ship.

Posted by: timmy3 | December 15, 2008 6:31 PM | Report abuse

As another poster mentioned, Intuit went through a bad publicity round a few years ago when they introduced a cumbersome registration/activation process, limited installation to a single computer, and other such nonsense. Kiplinger/H&R Block capitalized on that one too, saying one can install the program at home and at work or on a laptop and they took market share. Intuit had to eventually capitulate on that one too.

Never mind the installation hassles... people worried about being able to "activate" the program if six years down the road they had to revisit a return for audit purposes and such.

One would think they'd learn their lesson and strive to avoid such customer-hostile policies, but alas here we are and our memories are not short.

Posted by: syntap | December 15, 2008 9:19 PM | Report abuse

Intuit pretty much stands for what is wrong with American business. The company is run by MBAs. Very few tax backgrounds outside of the technical side. They're publicly traded, and Turbo Tax is pretty much the tail that wags the dog. Not much growth in Quicken or Quick Books, people are resistant to doing taxes on the web, so TT represents the opportunity for sales growth to get Wall St. excited. So they flog the product and users each year for more ways to get revenue -- even if they're customer unfriendly.

Part of the problem is that Intuit scooped up all of the "professional" tax programs that cost hundreds of dollars -- but are, basically, TT. So they have to come up with ways to cripple TT so that professionals won't trade they're Lacerte for TT out of Sam's Club.

I gave up on TT after that business where they wrote to your hard drive. That cost them immeasurable good will. I can't see myself ever going to TT.

Posted by: gbooksdc | December 15, 2008 11:15 PM | Report abuse

I've used Turbo Tax successfully for many years and hadn't heard of the new (now rescinded) pricing policy. Had they kept it, I'd have looked elsewhere for tax prep options. As is, I'll stick with it again this year.

Posted by: ccbweb | December 15, 2008 11:31 PM | Report abuse

In 2003, I reported a software error to Intuit which they "said" they would fix. The flaw, unless fixed could cost some taxpayers to overpay on house sales by significant amounts. I reported it in Jan; again in Feb. and a 3rd time in late March. In May, they "fixed" the flaw but NEVER notified their customers (seems their guarantee to reimburse taxpayers for software flaws got in their way).
I stopped using their products after that.

Posted by: wmboyd | December 16, 2008 12:32 AM | Report abuse

I quit Turbotax several years ago because of their agressive sales techniques and difficulty trying to find out the final price for Fed, State, and Efile both. They seem to keep pricing a secret until to late to change your mind. Also had a couple of instances where they sent unordered stuff and were going to charge my account unless I took instant action to say no. Who wants to put up with that kind of mistreatment.

Posted by: robertmorris | December 16, 2008 6:29 AM | Report abuse

Rob, please evaluate CompleteTaxPro by CCH. This is the web-based consumer product from CCH, who produce the professional version I use.

I pay thousands each year for CCH ProSytem fx, the professional program. The cost is high because I can call almost anytime and get a person on the phone within a few minutes.

It's almost impossible to provide support on a program that costs $50-100. The staffing and training issues are especially hard on a seasonal product like TurboTax.

Posted by: DuaneCPA | December 16, 2008 7:44 AM | Report abuse

I have been using TurboTax every year since the program used to come on little floppy disks (remember loading 5 or 6 floppies into your Mac to install the program?).

The TT has kept up with the ever changing Fed tax regulations and I've had good luck with my returns so far.

One puzzling aspect is the continuing downloading of "updates", many of which I have no clue as to what is really being downloaded. It would be nice to have some download log listing of exactly what each of these updates are, and their relevance.

Posted by: tomswift96 | December 16, 2008 7:58 AM | Report abuse

I've used the web-based version of TT that my bank makes available for several years now. I've been pleased with the results. However, while this has been a "free" service, the efile fees have increased each year. An interesting option may be Mint.com, which is considering offering a web-based tax prep program for 2008.

Posted by: daveb3 | December 16, 2008 8:38 AM | Report abuse

I'm an American living in Brazil but, unlike my fellow overseas citizen in Australia, was not able to file electornically, since the vendor's software erroneously uses the same two-letter country code (BR) for both Brazil and Belize, so when I typed in BR for Brazil, the address came up Belize. I phoned the vendor but all the rep could offer was to mail me forms (not taking care of the problem). TurboTax is useful for organizing one's numbers, but not in finding wayts to save money, and pretty useless for intricacies of filing when you live overseas (e.g., foreign earned income exclusion). Of course, the only time I went to H&R Block, I ended up explaining to the rep there how to fill out a form.

Posted by: Sutter | December 16, 2008 9:43 AM | Report abuse

I use 2nd Story Software's TaxACT to great advantage, and have for several years. TaxCut to me was too complex. Cost was a lot higher as well. www.TaxAct.com is the website for the very reasonable tax software that has served me well.

Bill

Posted by: bteal | December 16, 2008 10:01 AM | Report abuse

I don't blame Intuit, Microsoft and the others for trying to move from a product pricing model to a web services model. Their objective, of course, is to gain a permanent revenue stream from users, rather than a one-time purchase. Ultimately, in fact, their objective is to gain ownership of our desktops and an ownership stake in our information base.

Gaining control of our computers and information is vendors’ interest. Many industry leaders argue the web services model is our inevitable future. It is not, however, in our interest to pay both a ‘purchase’ fee and a ‘use’ fee for software. Unless the software industry is willing to switch to the old AT&T and IBM models of bundled leasing hardware and software, which would mean undertaking the hardware capital and obsolescence costs, the benefits of the ‘pay for use’ model is one-sided and should be strenuously resisted by the user community.

To those who believe product pricing should be based on what the market will bear, rather than reflect the cost of development and production, the pay-for-purchase then pay-for-use model makes sense. But, the 'market will bear' pricing model cannot work unless the vendor has the monopolistic power to affect market pricing. That market power is good for producers, bad for consumers and hostile to the concept of free competition that underlies capitalism. We should resist it.

Posted by: JohnInTexas | December 16, 2008 10:51 AM | Report abuse

I don't blame Intuit, Microsoft and the others for trying to move from a product pricing model to a web services model. Their objective, of course, is to gain a permanent revenue stream from users, rather than a one-time purchase. Ultimately, in fact, their objective is to gain ownership of our desktops and an ownership stake in our information base.

Gaining control of our computers and information is vendors’ interest. Many industry leaders argue the web services model is our inevitable future. It is not, however, in our interest to pay both a ‘purchase’ fee and a ‘use’ fee for software. Unless the software industry is willing to switch to the old AT&T and IBM models of bundled leasing hardware and software, which would mean undertaking the hardware capital and obsolescence costs, the benefits of the ‘pay for use’ model is one-sided and should be strenuously resisted by the user community.

To those who believe product pricing should be based on what the market will bear, rather than reflect the cost of development and production, the pay-for-purchase then pay-for-use model makes sense. But, the 'market will bear' pricing model cannot work unless the vendor has the monopolistic power to affect market pricing. That market power is good for producers, bad for consumers and hostile to the concept of free competition that underlies capitalism. We should resist it.

Posted by: JohnInTexas | December 16, 2008 10:58 AM | Report abuse

After years of Turbo Tax, I switched to Tax Cut's free offer 2 years ago. The software was a bit more cumbersome than Turbo Tax, but it did a decent job.

I found Intuit is too immersed in their own importance and in figuring new ways to get money from their customers. In addition, now that we have a taxpayer friendly government, I expect that soon the IRS will make available downloadable tax preparation software and stop privatizing this responsibility just so contributing corporations can squeeze more money out of us taxpayers.

The IRs provides the tax forms and the instructions as it has done for years, in this modern day and age there is no reason the IRS can not easily provide the software to prepare the tax returns. After all they are the authority on tax returns!

Besides, no one should have records of my tax returns or anyone elses tax returns. There is too much potential for abuse when we voluntarily give our information to self interest serving corporations.

Posted by: pjc8300892 | December 16, 2008 11:58 AM | Report abuse

A couple of points of clarification about H&R Block TaxCut.

While H&R Block TaxCut is less expensive than TurboTax that is not the key differentiator between the two products. The real difference is the personal service that is included with TaxCut.

Included with your TaxCut Premium software purchase is a 1-on-1 consultation with a tax professional, at no additional charge.

Secondly, TaxCut includes audit protection when you e-file. This is personal assistance from an H&R Block enrolled agent (experienced tax professional) who will help you, including representing you before the IRS if need be.

Again, this is live support, NOT a self-service website where you research the issue by yourself.

All this, and yes, a lower price.

David James
H&R Block TaxCut

Posted by: djames3420 | December 16, 2008 2:25 PM | Report abuse

I used Turbotax for several years but I stopped last year because the software was dumbed down so much it made it difficult to use effectively. They also have some agreement with my broker Fidelity where you are supposed to get $20 off if you go through them, but I never was able to make that fly. I used to use Quicken to pay bills and track finances, but my bank now has that pretty much online anyway and it costs less. Quicken used to be a good name - I even got my home mortgage through them but a few years ago they called me trying to con me into refinancing with an interest only loan. They tried to convince me it was the "smart" way to go. I lost all respect for them and their products after that. I now do my return the old fashioned way - pencil and paper. It's free and I have complete control of my return. Intuit needs to go out of business.

Posted by: aredant | December 16, 2008 3:08 PM | Report abuse

After arguing with Quicken reps (same company) over a rebate, I'm almost glad to have a reason not to use Turbo Tax. Why support a company that treats their customers so poorly?

Posted by: dezlboy1 | December 16, 2008 4:45 PM | Report abuse

When I buy something, I Own it! The seller gives up all rights to it. If Turbo Tax wants to screw it's customer base, this is one customer who says, there are plenty of other copmanies out there with similar products. I guess Turbo Tax is following the General Motors business plan. Hey, maybe I missed it, has Turbo Tax asked for a bailout yet?

Posted by: mrsltc1 | December 16, 2008 5:04 PM | Report abuse

When you buy a hammer, do you pay extra for every nail you pound after the first? When you use Turbo Tax, should you pay more for every form you fill out with it? Do you get a discount if you only use it for the short form? Then why more for every return? You're buying a product, not the result. How about if you pay more for your car based on how far you drive it? Am I the only person who sees this as a ridiculously greedy attempt to gouge people?

Posted by: tomanderson1 | December 16, 2008 5:06 PM | Report abuse

I have been using TurboTax for 4 or 5 years, and it's worked pretty well. In 2006 and 2007 I prepared multiple returns, since my kids started working. I just ordered TT for tax year 2008, and if I had known about the per-return charge I likely would not have placed the order. tomanderson1 has it exactly right: when I buy a hammer, I expect to pay the same price whether I plan to hammer one nail or a hundred.

Bottom line: if Intuit tries to sneak in that per-return charge again, I'll be gone before you can say "Form 1040."

Posted by: ajsmithva | December 16, 2008 5:54 PM | Report abuse

Glad to see Inuit realized the error of their ways. I sometimes need to create multiple returns to test various scenarios or to prepare at state return. In some years my state return has required alternate entries from my federal return, which necessitates a new file in Turbo Tax. Similarly, an amended return needs a new file. Did they seriously think that customers would pay such high fees per return on top of the initial price?

I agree with the other posters that it is reasonable to capture some additional revenue from users that may be preparing a large number of returns, but there are smarter ways to go about this. They already have a graduated pricing scale (Deluxe, Premier, Business, Pro, etc). Perhaps they could consider self-only, familiy, and extended versions that allow them to capture some additional revenue without penalizing (and driving away) all of their users at once.

Of course, I find it annoying that our tax code is so complicated that I spend significant time and money determining the amount of tax I owe. I am willing to pay taxes; the government has a responsibility to make it less burdensome. Also, while I appreciate that private companies can earn profits on providing services, I really find it contemptable that an industry has sprung up that takes advantage of the complicated tax system. Particularly when the industry makes so much money from those least able to afford it.

Posted by: EconGirl2 | December 16, 2008 6:23 PM | Report abuse

I have been using Turbo Tax but I think I'll give Tax Cut a try this year.

Posted by: hicarroll | December 16, 2008 7:33 PM | Report abuse

I'm a CPA, and I have used Turbo Tax for several years. Their "support" is simply awful. Long, long waits to talk with someone who barely speaks English, and has absolutely no knowledge about the program. I can go poster wmboyd one better: For three years(!) I have reported the same program error, spent much time talking with the supervisor's supervisor's supervisor (who must sit near God!). They finally agree that there is an error in the program, but it has yet to be fixed. I'll wait till February and read some reviews before I buy it again. I always buy it at Costco where it is substantially cheaper than elsewhere.

Posted by: susiebrown | December 16, 2008 7:49 PM | Report abuse

Intuit has been going down the drain fast in recent years.... Quicken is full of bugs and they are slow to react ... Quicken for Mac has basically disappeared and they keep saying something new is coming but it never does ...

I've relied on Quicken for 10+ yrs but will probably dump it in the future, the company simply doesn't seem to care about customer satisfaction any more.

Posted by: fendertweed | December 17, 2008 9:57 AM | Report abuse

I'm glad to hear about the problems with Intuit. I've used TurboTax successfully for years, starting with a free web version thru a mutual fund company, and then the disk. I should have smelled a rat when without warning, Intuit TurboTax no longer supported Windows 98 back in I think 2006. I had to buy a new PC quickly to run the program. Not bad because the old one needed replacement anyway. Then came this, again unannounced, 50% price increase. ?? timing? I think I will look around for another tax program for my 2009 taxes. My hat is off to those of you who do your returns by hand. I last did that in the mid '90s and sweated for many hours doing it that way. It is a learning experience, but is certainly, unless one is an accountant or tax pro, something to be put in the "been there done that" file.

I had previously heard that "TaxCut" was inferior to TurboTax, and my CPA brother-in-law had recommended TurboTax. Thanks all for your alternate recommendations for tax programs. Now we can sit back and see which direction the IRS will go under a brand-new administration that takes over Jan 20, 2009!

Posted by: photodon | December 17, 2008 1:39 PM | Report abuse

I, for one, have had enough of TurboTax. Like many other slackers, I often wait until the last minute to file my taxes. When I did it each of the last 2 years, I ran into problems filing online, through TurboTax's site. This year I sent them a request for assistance. They said they'd get back to me within 3 days (an absurd duration for customer support). However, here I am (how many months later?) still waiting for that reply from them (I utilized a work around, involving the USPS, that took money away from Intuit).

This article just confirms my previous theory that Intuit can't spell "customer service", even if you spot them the consonants.

I've had enough. Thank you for pointing out the #2 brand of tax software, soon to be #1 in my book.

Posted by: TNeff-VA | December 17, 2008 7:33 PM | Report abuse

We run a computer support service for businesses and individuals.
Intuit is among our top threee most often heard complaints, right behind infestations, and problems with Symantec Norton or McAfee.
Their charges are just as unacceptable for the various services for QuickBooks and other software. Their owners now must consider them a cash cow.

Posted by: ray1bay | December 18, 2008 9:18 AM | Report abuse

One problem with TaxCut: No Home-Business version for Mac!
The Amazon price on the TTx version appears less that what I remember it to be last year.

Posted by: bata4689 | December 18, 2008 2:58 PM | Report abuse

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