H&R Block, Intuit stocks slide after report on potential IRS tax filing portal
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H&R Block (NYSE:HRB) stock sank 7.5% and TurboTax parent Intuit (NASDAQ:INTU) stock dropped 3.7% in Monday premarket trading after a report that the Biden administration is considering creating a government-run tax filing portal that would provide an alternative to private tax preparation services.
Consumer advocates and Democrats have been urging the Internal Revenue Service to provide free online tax filing on its website, particularly for filers with straightforward returns. Private tax prep companies, meanwhile, are increasing their spending on lobbying lawmakers to oppose a shift that could reduce their revenue. They're emphasizing free options that taxpayers already have access to.
The IRS is scheduled to release a report this week on a possible Direct File system, such as TurboTax but on the IRS's website, the Wall Street Journal reported. The Biden administration will then decide on whether it will pursue it.
Tax-prep companies say they already provide free services for many federal returns, but taxpayers often pay for state tax return preparation or other products. The IRS also has a Free File program for those who make under $73K. H&R Block and Intuit's (INTU) TurboTax no longer provide services through Free File, but companies such as TaxSlayer and TaxAct do.
Part of the reason tax-prep companies are opposed to the government tax-filing portal is where the next step could go â a government service that would automatically fill out tax returns from the information it already has on filers' wages and other income, the WSJ said.
Update on May 17: Intuit (INTU) contends that free tax preparation is already available to all Americans and that creating a government-run tax filing system would be a conflict of interest and a waste of taxpayer money, the company said in a blog post. In addition, an IRS-run direct e-filing system wouldn't guarantee maximum refunds for taxpayers and does not handle state tax returns, it said.
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