TurboTax software fuels indignation from e-filers

Backlash: An anti-piracy adjustment to the popular software by Intuit has created a deluge of complaints from taxpayers.

March 09, 2003|By Andrew Ratner | Andrew Ratner,SUN STAFF

Antonius Kusuma isn't a novice with computers. He maintains them for a living for the brokerage giant Merrill Lynch & Co. Inc. So when he popped the tax-preparation software TurboTax into his computer at his Bordentown, N.J., home recently, he expected to complete his federal 2002 return without a problem.

Three hours later, he abandoned the effort in exasperation -- and his choice words didn't even include the letters "IRS."

"I was not able to activate my TurboTax even though it was the first time I installed it," Kusuma, 37, wrote in a complaint he posted to amazon.com, from which he bought the product. "I gave up. I have been a TurboTax user for the last five years, but I think this year I will have to switch."

TurboTax is the king of consumer software. It sells more than any other product, and its name has become synonymous with do-it-yourself tax preparation. But its Silicon Valley maker, Intuit Corp., has created a mountain of ill will this winter with a change in its signature product.

If the problems and backlash persist as tax season builds, the controversy could become the computer industry's version of "New Coke."

Intuit altered TurboTax this year to keep customers from sharing the software with friends or family who then don't have to pay for it. TurboTax retails for about $20 to $50, depending on the version.

The company hoped that the change would be inconspicuous and smooth -- a few more numbers for users to type to launch the program -- and for many it has been. But for thousands of others, the revision has made TurboTax inoperable, intrusive, infernal.

"This is a big, fat, hairy fur ball that blew up in their face," said Eric Wanger, a senior analyst for Barrington Research in Chicago. "Intuit has been amazed by the bruising it is taking on this. On the other hand, they're going to be financially rewarded for doing it. Market share is all well and good, but if you don't get paid for your product, who cares? The bottom line is TurboTax is one of the most pirated pieces of software around."

Intuit had contemplated making the change for years, because so many people were borrowing the program from friends or family without buying it, or finding it for free on the Web in violation of copyright law.

The company finally had enough when the federal Internal Revenue Service reported last year that it received 15 million tax returns filed electronically via TurboTax. That was twice the number of TurboTax copies sold. Even accounting for people who legitimately use it to do multiple returns for one household, the company figures it loses about $80 million a year because of software piracy.

Intuit contracted with a CD copy-protection company called Macrovision Corp. to alter TurboTax to, in essence, electronically lock it to the first computer onto which it is loaded.

A customer begins the program by typing in a number on the package unique to each copy. That goes to Intuit's computers, which verify the product and send back a code that enables the user's computer to activate the software. Without it, the software won't start.

Intuit acknowledges that it was prepared for some backlash, but not this.

Thousands of customers complained about the maneuver in "chat rooms" and "Web logs." Many identified themselves as longtime, loyal users who, to Intuit's dismay, threatened not to use the product again. Others said they were offended by the company controlling their access to software after they had paid for it and brought it into their homes -- "Big Brotherism," someone called it.

Negative reviews

Still others would have happily settled for a philosophical quarrel: They couldn't even get the program to start.

Amazon.com, the big online retailer, reported that TurboTax generated more customer reviews, mostly negative, in two months on its Web site than Microsoft Corp.'s widely known Windows XP has received in two years. XP was the subject of similar controversy when Bill Gates unveiled it in 2001 with restrictions to combat unlicensed use.

"Just the fact that you have to be on a leash to them to make it work, that's the part I don't like," said David Mork, 49, a mechanical engineer in Cheyenne, Wyo., and a TurboTax user for a decade. "Once you walk out the door with it from a store, that should be it. It's an insult to people's integrity. Next year, if they continue this, I'm going elsewhere."

Various technology columnists in the media also blasted the change, including The Wall Street Journal's influential product reviewer Walter R. Mossberg. Some of them wrote that they now favored TaxCut, similar tax-preparation software by H&R Block Inc., the Kansas City, Mo.-based tax accounting chain.

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