Intuit shares saw a 6% fall on Thursday following the Internal Revenue Service (IRS) announcement that it will permanently implement its direct income tax filing programme for all, starting from the 2025 tax season. This threatens the demand for Intuit's TurboTax software. The decision was supported by IRS Commissioner Danny Werfel after the Direct File pilot program's success with over 140,000 taxpayers in 12 states during the 2024 tax season, and positive feedback from partners.
The IRS noted that many taxpayers prefer having multiple free options for electronic tax filing, acknowledging the role of the Direct File program in simplifying the tax process for Americans, including saving them time and money.
Intuit had warned last week of a possible loss of 1 million customers who previously used its free TurboTax program as they move to the IRS Direct File option. The company anticipates a 1% decrease in TurboTax filing units due to "share loss with pay-nothing and lower average revenue per return customer."
In April, Intuit criticized the IRS program for reaching only seven out of every 1,000 taxpayers eligible for use, among other issues. The stock has seen a downward trend in the past five days, only worsened by the IRS announcement on Thursday.
Despite introducing the broadened Direct File service, the IRS confirmed it will continue to support other tax preparation software provided by private companies. By the end of Thursday, Intuit shares were 5.9% lower, priced at $562.97. Since the start of the year, they’ve lost nearly 10% of their value.