• by Thom Forbes , January 30, 2015

As any kid knows, it’s not wise to spring an unwelcome surprise on your parents while they are preparing their income taxes. Intuit’s TurboTax, of all entities, has just learned the lesson.

After several weeks of tumult in social media — and a previous unsatisfactory attempt to mollify returning users with a $25 rebate offer after they filed their taxes using software that was stripped of key forms included in previous years — the nation’s largest tax preparation software firm “totally cave[d]” yesterday, as USA Today puts it. 

“Intuit finally backs down — all the way down — in its TurboTax fiasco,” reads the hed in the Los Angeles Times. “The only remaining question is what took them so long?” asks Michael Hiltzik, who has been on Intuit’s case for a while. 

The hed above a June 23 LinkedIn post by Brad Smith, Intuit’s president and CEO, read: “In Business, Love Means Having to Say You’re Sorry,” putting the error on the most intimate of terms. “The old adage — love means never having to say you’re sorry — never rang true for me. It doesn’t apply in my personal life, nor does it apply in business,” Smith went on. “If you disappoint the ones you care about — employees, customers, partners, shareholders — the right thing to do is to step up, own the mistake and apologize.” 

Yesterday’s updated message was “Sorry Wasn’t Enough.”

“Starting in early February, buyers of the Deluxe version of TurboTax’ tax-preparation software will be upgraded to the Premier or Home and Business version of the software,” explainsUSA Today’s Matt Kranz. “This upgrade will return the functionality that was stripped out of the mid-priced version this year. The upgrade will be provided to users for free, a giant victory for the users of the desktop software.”

The “functionality” Krantz is referring to involves the inclusion of Schedule C for business income and expenses, Schedule D for capital gains and losses, Schedule E for rental property and Schedule F for a farm.

After reading from a few of the probably more reasonable comments he received from his first apology, Smith earnestly tells us in an embedded YouTube video: “We’ve heard you. And we’re going to fix it. This year, returning desktop customers who need to upgrade to Premier will be able to do so within the product for free. Now we’re not stopping there. Next year we’re changing back to the Turbo Tax desktop software you know and love, restoring the forms that you’ve counted on for years.”

Forbes’ Janet Novack provides a tidy chronology of “a series of missteps that should make a good Harvard business school case study,” in a piece that chastises the company for not anticipating the “blow back” for the $25 refund offer, which required that customers provide their Social Security numbers on the request form.

“TurboTax first underestimated how much its product changes would anger longtime users; then provided free upgrades to customers who called its 800 line and screamed the loudest; and then a week ago, rolled out apologies from TurboTax general manager Sasan Goodarzi and from Smith, as well as the $25 refund offer, which itself raised privacy concerns,” Novack writes.

TurboTax products were used to file 29 million returns last year, “while its two chief competitors, H&R Block and TaxACT, a unit of Blucora, each assisted with about 7 million self-prepared returns,” reports Laura Saunders in the Wall Street Journal. 

In comparing the three offerings last week, BloombergBusiness’ Benjamin Steverman determined that TaxACT is the “cheapest option for most people” even if many don’t know it because it “spends little on marketing.” While H&R Block “claims the cheapest option... [it’s] only available to those who fit narrow criteria.” TurboTax, meanwhile, “says it can charge more because it’s a better product than its rivals.”  

About a million Turbo Tax customers were affected by the missing forms in the Deluxe version this year but the PR damage could be far more extensive than the numbers indicate. Regarding that “old adage” that Smith refers to: This is the face of it today, and it seems to be authentic. TurboTax can only hope that its customers feel the same way about its latest corrected return and apology.