Jim WATSON / AFP
Shares of tax-filing providers H&R Block and Intuit dropped on Tuesday after a report from The Washington Post said Elon Musk's DOGE commission is exploring a free mobile tax-filing app.
H&R Block stock dropped as much as 9%, while shares of Intuit dropped as much as 7%. Intuit owns TurboTax, an online tax filing platform.
According to the report, President-elect Donald Trump's Department of Government Efficiency, led by Elon Musk and Vivek Ramaswamy, discussed plans for creating a mobile app that would allow Americans to file their taxes for free.
A post on X from the DOGE account over the weekend highlighted how complex America's tax code has become, highlighting that the number of words in the U.S. tax code has surged nearly 1,000% since 1955.
"This must be simplified," the post said.
In 1955, there were less than 1.5 million words in the U.S. Tax Code.
— Department of Government Efficiency (@DOGE) November 17, 2024
Today, there are more than 16 million words.
Because of this complexity, Americans collectively spend 6.5 billion hours preparing and filing their taxes each year.
This must be simplified. pic.twitter.com/2CxJMt1Rcr
H&R Block generates nearly $4 billion in annual revenue from its tax preparation services, while nearly a third of Intuit's revenue, about $5 billion, comes from its TurboTax offering.
This isn't the first time a government-based tax filing service has weighed on Intuit and H&R Block shares.
The Biden administration introduced a pilot program from the IRS to allow taxpayers to file their taxes online for free as part of the Inflation Reduction Act.
Wall Street is mixed about the potential impacts of the government encroaching on tax preparation businesses.
Analysts at Jefferies wrote in a Tuesday note that the sell-off in Intuit stock was "unwarranted" because a tax filing app from the DOGE commission was "unlikely to be a high priority in a long list of initiatives," adding that the IRS tax filing pilot program "had little success."
Meanwhile, Bloomberg Intelligence analyst Andrew Silverman wrote that a tax filing offering from the IRS "could, in theory, threaten revenue for H&R Block, Jackson Hewitt and Intuit."
