Bloomberg Briefing, Jan. 24 | Business News

Bloomberg Briefing, Jan. 24

25 Jan 2015 | Author: | No comments yet »

Intuit Kicks a TurboTax Hornet’s NestRaising TurboTax Prices, Intuit Kicks a Hornet’s Nest.

Intuit , maker of the popular TurboTax tax-preparation software, has infuriated many longtime users by requiring them to buy more-expensive software to complete their 2014 tax returns. Responding to a barrage of complaints, Intuit is apologizing to customers who used its TurboTax Deluxe software on their desktop computers last year and may face higher charges this year.Intuit , the maker of TurboTax, on Thursday apologized to customers angry over changes to its tax-preparation software for desktop computers that will force many long-time users to pay more this year.Intuit, which is reeling from customer outrage over a surreptitious price hike this year in its market-leading TurboTax tax preparation software, has moved to quell the anger.

Starting this year, people who prepare their taxes on a personal computer can’t use TurboTax Deluxe if they want to electronically file common tax forms, including Schedule C for a business, Schedule D for capital gains and losses or Schedule E for rental property. The company on Friday began emailing those customers to offer $25 to people who find they must upgrade to TurboTax Premier or TurboTax Home & Business to file their 2014 returns. “We messed up. We made a change…and we didn’t do enough to communicate this change to you as proactively and broadly as we could or should have,” says the message from Sasan Goodarzi, the general manager of Intuit TurboTax.

It remains to be seen if the apology and offer will be sufficient to appease disgruntled customers, or if many of them will switch to competing products. Beginning Friday, TurboTax’ maker Intuit (INTU) will issue $25 refunds back to any TurboTax customer forced to buy the most expensive version of the company’s software this year after buying the less-costly Deluxe version last year. Among WSJ.com readers commenting on our blog post about the TurboTax offer, far more vented their anger or vowed to stop using the product than expressed satisfaction with the company’s reaction. “For me the damage is done,” said one. “After decades as a TurboTax customer, I’ll be shopping for an alternative this year.” Others said they have already switched to other products, and some said they had been surprised by the ease of making the transition. I am very sorry for the anger and frustration we may have caused you.” But Goodarzi still hasn’t offered a coherent explanation for why TurboTax hollowed out Deluxe in the first place. “We’re very customer-driven,” he told me. “We didn’t do this for revenue reasons.” Intuit says the change has something to do with reducing customer confusion, which is odd since it’s had the opposite effect. On Amazon.com, reviewers posted more than 1,200 negative comments, complaining of “bait-and-switch” and “price gouging.” (Journal readers sounded off in a blog post.) “The company seems intent on fleecing the customer by increasing the price with no product improvement,” says Don Rickelman, a retired entrepreneur in Naples, Fla.

Forbes reported two weeks ago that dissatisfied Deluxe users who were forced to upgrade could call TurboTax’s toll free number (800-445-1875, from 8 AM to 8 PM EST) and demand a free upgrade. Asked about the comments on WSJ.com, a TurboTax spokeswoman said, “We know we’ve disappointed some customers this year and are focused on regaining their trust.” Currently Intuit is the industry leader among firms providing assistance to do-it-yourself tax filers. Fanning the flames of the controversy, H&R Block offered a free download of its Deluxe software for 2014 returns to TurboTax Deluxe customers who present a proof of purchase.

TurboTax apologized and is offering deluxe buyers $25. “While we made the best long-term decision, our good intent was not matched with good execution,” says Julie Miller, a spokeswoman for Intuit Inc., which owns TurboTax. In addition to refunding $25 to affected customers, TurboTax General Manager Sasan Goodarzi is issuing a lengthy written apology to TurboTax customers for the change. “We messed up. Information about the refund will be contained in new updates that software users download and will appear in a message from Intuit after eligible taxpayers electronically file this year. Its leading rivals, H&R Block and TaxAct, have exploited the uproar by pointing out their lower price and equivalent functionality–H&R Block even offers its software for free to discontented TurboTax users.

That’s a crafty move, because home tax preparers are creatures of habit: once they get accustomed to a particular software, they’re loath to switch unless given a good reason–as Intuit did. He also is proposing to impose this tax on lifetime gifts of property and to eliminate the “step up,” which exempts assets held at death from gains tax. But reviews by Consumer Reports and others suggest that there hasn’t been much difference among them–possibly not enough to justify the price difference of $20 more more between, say, TurboTax Premier and the cheaper H&R Block Deluxe.

While the European Central Bank—based in Frankfurt—announced actions on Thursday to boost the eurozone economy, the effects are already being felt in U.S. financial markets, and could benefit Americans. A Wall Street Journal report Wednesday that the ECB was considering a new stimulus package gave U.S. stocks a modest lift and triggered a pullback in U.S. government bonds, causing their yields to rise.

Since I upgraded to this version for 2013, I’m not eligible for the rebate.) Goodarzi insisted that TurboTax has seen no erosion of its market share as a result of the brouhaha and that the deep discounts available this weekend had been planned before the user revolt. (Like Uber, TurboTax charges customers the most when they’re most desperate—meaning its prices go up close to the April 15th tax filing deadline. ) Last year, about 28 million federal tax returns were filed electronically using TurboTax, compared with 7 million each for H&R Block software and TaxAct. And it’s only a better deal than TaxACT’s $20 option if you take into account H&R Block’s “in-person audit support.” Other H&R Block federal options cost $30 and $50 online. Under the president’s proposal, if a grandfather gives his granddaughter stock worth $20,000 that he acquired for $2,000, the transfer could trigger capital-gains tax on $18,000. Those who went to take advantage of the offer need to send an email to SwitchToBlock@hrblock.com containing their name, email and phone number; whether they use a Windows or MAC operating system; and a scan of their store receipt for TurboTax or a copy of the email showing their TurboTax download code. TurboTax says it can charge more because it’s a better product than its rivals; Intuit’s Miller cites the software’s “intuitiveness.” TurboTax does offer one bargain.

Intuit is perfectly capable of simply restoring the old functionality to Deluxe by delivering upgrades online–as all TurboTax users know, the program automatically checks for and downloads forms and functions that have changed since the last time it was opened. It’s as if the Coca-Cola Company responded to its “New Coke” fiasco of 1985 by offering customers the old Coke, but only if they proved they’d quaffed and hated the new version and mailed in a form to get the replacement. Collectively, the 19 countries that share the euro represent one of the U.S.’s largest trading partners, and as a group are at risk of a third recession in six years. If the ECB’s new bond-buying program works as intended, it should spur economic activity there, which should mean more business for U.S. companies and possibly more demand for U.S. workers.

The program works by asking users a series of questions and filling out forms as needed; if you answer “no” when asked if you bought or sold stocks this year, then you’ll never see Schedule D. But, “expensive art and similar collectibles” wouldn’t qualify for this exclusion, the fact sheet says. “Suppose your family heirloom is a collection of fine silver or your furniture consists of valuable antiques?” says Ms. We did not handle this change in a manner that respected our loyal customers.” Jan. 23rd update: Intuit CEO Brad Smith has now written a LinkedIn “Influencer” post, In Business, Love Means Having To Say You’re Sorry, that amounts to another apology and an analysis of lessons learned, including: “Respond when you hear the questions.” (In fact, the first scathing reviews of the TurboTax Deluxe changes began appearing on Amazon when the 2014 product was released in November.)

President Barack Obama ’s push to tax college-saving accounts, including the popular “529” accounts, would affect millions of Americans now stashing money for their children’s education, stirring debate about how to structure federal student aid and how to define the middle class. The earlier you file, the cheaper it tends to be. (The IRS started accepting returns Jan. 20.) Early filers tend to be lower-income Americans getting big refunds, and special offers aimed at them, like TurboTax’s entirely free returns, often disappear by late February, Schneeberger says.

The proposal, which has sparked a public backlash but faces dim prospects in Congress, targets 529 accounts that boomed after Congress passed the tax breaks starting in 2001. The president’s push, part of a broader tax overhaul unveiled last weekend, would strip the main federal tax benefit from the plans by taxing any money earned from future contributions. The world built a record 97 buildings that were 200 meters (656 feet) or taller in 2014, and for the seventh year in a row, China completed the greatest number of them, according to a new report from the U.S.-based Council on Tall Buildings and Urban Habitat (see chart, above). That’s more than all such skyscrapers built in the Philippines, the world’s No. 2 builder behind China, with five.If you were to stack all of China’s new skyscrapers on top of each other, they would reach 13,548 meters (44,449 feet) into the sky—close to the altitude limit for most commercial airliners.

While One World Trade Center in New York, at 541 meters tall (1,776 feet), was the tallest building completed in 2014, the Chinese city of Wuxi was home to three of the 10 tallest buildings erected last year.The Wharf Times Square, a 339-meter tall mixed-use hotel and office complex in Wuxi, was the tallest Chinese building completed last year.

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