Tax Season Is Here: Meet The New Federal Program That Can Eat Away At Tax Preparation Companies
Portfolio Pulse from Natan Ponieman
The IRS has launched a free tax filing pilot program called Direct File, which could impact the business of tax preparation companies. The program is part of the Inflation Reduction Act of 2022 and is currently available in 12 states for federal and state workers, with plans to expand. H & R Block Inc (NYSE:HRB) and Intuit Inc (NASDAQ:INTU), the owner of TurboTax, are among the companies that could be affected, as their shares have previously dropped when the IRS announced plans for the software. ETFs like Global X FinTech ETF (NASDAQ:FINX) and iShares Expanded Tech-Software Sector ETF (BATS:IGV), which hold Intuit shares, may also be impacted.
January 30, 2024 | 7:31 pm
News sentiment analysis
Sort by:
Descending
NEGATIVE IMPACT
Global X FinTech ETF, with Intuit as a significant holding, may experience indirect impact from the IRS's Direct File program.
Since Intuit is a major holding within the Global X FinTech ETF, any negative impact on Intuit's business from the Direct File program could potentially affect the ETF's performance.
CONFIDENCE 70
IMPORTANCE 60
RELEVANCE 70
NEGATIVE IMPACT
H & R Block's business could be significantly impacted by the IRS's Direct File program, potentially reducing demand for their services.
The introduction of a free alternative by the IRS could lead to a decrease in demand for H & R Block's paid services, negatively affecting their revenue and potentially their stock price in the short term.
CONFIDENCE 75
IMPORTANCE 80
RELEVANCE 90
NEGATIVE IMPACT
iShares Expanded Tech-Software Sector ETF, which includes Intuit in its holdings, could be impacted by the IRS's Direct File program.
iShares Expanded Tech-Software Sector ETF's performance could be indirectly influenced by any negative impact on Intuit's business due to the IRS's Direct File program, as Intuit is a significant part of the ETF's portfolio.
CONFIDENCE 70
IMPORTANCE 60
RELEVANCE 70
NEGATIVE IMPACT
Intuit Inc, through its TurboTax service, faces a threat from the IRS's Direct File program, which could lead to a loss in market share.
As the owner of TurboTax, Intuit could see a similar negative impact as H & R Block due to the IRS's free tax filing program, which may reduce the need for TurboTax's paid services.
CONFIDENCE 75
IMPORTANCE 80
RELEVANCE 90