IRS Free Tax Filing Tool Launch Triggers Intuit Share Drop as TurboTax Loses 1 Million Free Users

By Madz Dizon

May 25, 2024 11:29 AM EDT

IRS Free Tax Filing Tool Launch Triggers Intuit Share Drop as TurboTax Loses 1 Million Free Users
Turbo Tax is seen on devices on February 22, 2018 in San Francisco, California.
(Photo : Kimberly White/Getty Images for TurboTax)

Following the Internal Revenue Service's (IRS) launch of free tax filing tool, shares of Intuit Inc. experienced a significant decline, the largest in over 18 months. The news came after the company's announcement of losing one million customers who use its TurboTax service for free.

Intuit Stock Slumps as TurboTax Loses One Million Users

According to the software developer based in Mountain View, California, the number of people who used TurboTax for free to file their taxes this year decreased by approximately one million, with a total of 10 million users. Additionally, it experienced a decline in its customer base among those seeking lower-priced options.

The shares experienced a significant drop of 9.3% to $600.49 on Friday in New York, marking the largest intraday decline since November 2022. The stock had experienced a 6% increase in value so far this year, up until Thursday's closing.

Intuit has been diligently tailoring its TurboTax software to meet the needs of individuals with intricate tax situations. The company is confident that these specific customers would greatly benefit from the convenience of online expert assistance.

According to Fortune, the company has also highlighted the addition of advanced artificial intelligence capabilities in its products. Despite the decline in the number of free customers, there are indications that Intuit's investments are yielding positive results.

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IRS Extends Free Tax Filing Program

Meanwhile, the IRS has announced that the Free File program will be extended through October 2029.

This decision comes after an agreement was reached to ensure that taxpayers will continue to have access to free private-sector tax software. The IRS has recently announced a new agreement that extends for five years.
File at no cost

The IRS Free File is provided through a collaboration between the IRS and Free File Inc., previously known as the Free File Alliance.

As part of this collaboration, online tax preparation and filing software providers are offering their products to taxpayers who meet the requirements.

Free File made its debut in 2003, sparking some controversy along the way. The purpose of its development was to offer free e-filing services to a majority of taxpayers, aiming to assist the IRS in achieving the e-file target set by the Restructuring and Reform Act of 1998.

At the time, there was curiosity surrounding the decision of the federal government to collaborate with the private tax prep industry rather than developing its own software.

Today, tax preparation software companies are no longer allowed to conceal free filing services from Google or other search results pages. In addition, if you are unable to file for free after visiting a company's Free File website, you can return to the Free File website to explore other options.

Every IRS Free File company is required to provide information and a link to the Free File site if you do not meet the qualifications.

The 2019 Free File agreement also eliminated the IRS' previous commitment to refrain from competing with the current tax preparation software-more on that later.

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