H&R Block, Intuit drop on report that Musk's DOGE may develop a tax app

Kate Gibson

November 19, 2024 at 10:55 PM

H&R Block and Intuit shares dropped on Tuesday after the Washington Post reported that President-elect Donald Trump's Department of Government Efficiency, which is run by billionaires Elon Musk and Vivek Ramaswamy, is looking at developing a free app for people to file their taxes.

The publication cited two people, who spoke on the condition of anonymity, in reporting that the leaders of the incoming administration's DOGE discussed the idea of crafting a mobile app to file income tax returns with the Internal Revenue Service.

H&R Block shares tumbled 8.2%, while Intuit shed 5.1% on Tuesday. As the dominant players in tax preparation, H&R Block and Intuit, the maker of TurboTax, generate billions in revenue annually by offering online and in-person services.

The Biden Administration in March rolled out a pilot Direct File program through the IRS in 12 states. It allows qualified taxpayers file directly through a federal portal. Additionally, the IRS provides services through its Free File program for those who made an adjusted gross income of $79,000 or less.

More than 100,000 taxpayers used the new Direct File program to file their taxes this year, which marked the first time the system was in operation, according to the Treasury Department.

The DOGE, which has been directed by Trump to slash government spending and cut federal regulations, criticized the complexity of the U.S tax code in a Nov. 16 post on X, the social media service owned by Musk.

"In 1955, there were less than 1.5 million words in the U.S. Tax Code. Today, there are more than 16 million words," its X account wrote. "Because of this complexity, Americans collectively spend 6.5 billion hours preparing and filing their taxes each year."

Intuit and H&R Block also have free filing options.

That said, the Federal Trade Commission earlier in the year barred Intuit from advertising its popular TurboTax product as free when most people have to pay to use it. The FTC in February filed an administrative complaint against H&R Block, alleging it marketed its tax-prep products as free yet deleted the data as a way to pressure them to pay for pricier services. Both companies said they'd appeal.

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