H&R Block (HRB) shares are sinking as the Internal Revenue Service (IRS) is set to release a report this week about plans to offer free online tax filings on its website.
The idea of allowing taxpayers to file electronically directly with the agency at no cost was part of the $80 billion set aside for IRS upgrades in last year’s Inflation Reduction Act. The agency noted that its current FreeFile tax return program, which requires a third-party tax preparer, was used by just 3% of taxpayers last year. In addition, it estimated that the average cost to Americans to do their tax returns in 2023 was $250.
Following the release of the report, the Biden Administration will determine whether to go ahead with the proposal.
Tax Preparation Firms Oppose Move
H&R Block and TurboTax tax software provider Intuit (INTU) are pushing back against the plan. "It would be a conflict of interest to have the agency that collects, investigates, and enforces taxes to also be a tax preparer," said Intuit CEO Sasan Goodarzi.
H&R Block shares are down close to 4%, while those of Intuit are sliding 1.5%. Shares of the former are down 14% year-to-date, while those of the latter are up 8% over the same period.