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$1B Class Action Claims E-Filing Group Overcharged

Posted Nov 15, 2007 8:19 AM CDT
By Debra Cassens Weiss

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A $1 billion class action lawsuit alleges a group of income-tax software companies charged excessive fees for e-filing.

The companies named include H&R Block Inc. and Intuit Inc., the Legal Intelligencer reports. They participated in a group called Free File Alliance, which contracted with the Internal Revenue Service to file federal tax returns electronically.

The IRS wants the group to file tax returns for free for 70 percent of U.S. taxpayers, but only a small percentage of eligible people take advantage of the service, the suit says. Only those who make $52,000 or less in adjusted gross income qualify for free filing. The suit claims the fees charged for others violate federal law requiring the group to set "fair and uniform" fees for e-filing.

Philadelphia plaintiffs firm Feldman, Shepherd, Wohlgelernter, Tanner & Weinstock filed the lawsuit. Firm lawyer Thomas More Marrone said in a statement that the companies have used the alliance to push the commercial products they sell.

“E-filing has become an enormous profit center for cartel members," he said.

Free File Alliance released a statement that said it has filed free returns for more than 17 million taxpayers in “a win for taxpayers and a win for consumers.”

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