Intuit and H&R Block stocks tank because Elon Musk's DOGE wants to simplify tax filing
Tax prep company stocks are falling as Elon Musk’s “Department of Government Efficiency” (DOGE) reportedly has its sights locked on simplifying the tax code — and helping Americans file for free.
On Tuesday, the Washington Post reported that Musk and former presidential candidate and billionaire entrepreneur Vivek Ramaswamy discussed creating a mobile app for U.S. citizens to use to file their taxes for free with the Internal Revenue Service. President-elect Donald Trump tapped the pair of wealthy businessmen to lead DOGE last week, which is described as an outside-of-government group aiming to slash regulations and cut government spending.
They also discussed overhauling the tax system to let Americans file through a mobile app, The Post reports, citing anonymous sources close to the commission who described the conversations as very early.
Even so, investors are rushing to sell. Shares of Intuit (INTU), the company behind TurboTax, dropped by more than 5%, while rival H&R Block’s (HRB) shares fell by almost 8%, putting the company on track for its worst day in three years.
Democratic politicians have tried for years to limit the power of private tax filing firms like Intuit by creating a government tool allowing Americans to file their taxes. The IRS — backed by President Joe Biden’s Inflation Reduction Act — launched a free “Direct File” pilot program in 12 states, helping more than 140,800 taxpayers file directly last tax season.
Direct File, unlike the IRS’ Free File, isn’t subject to income limits. In that program, which tens of millions of Americans don’t take advantage of, participants are cut off after they make $66,000 annually.
Direct File also is based entirely on new software built by the IRS. Many states have free filing options, but they’re based on systems designed and licensed by private companies. In May, the IRS said it would provide access to Direct File to all 50 states in 2025.
“The clear message is that many taxpayers across the nation want the IRS to provide more than one no-cost option for filing electronically,” IRS Commissioner Danny Werfel said in May. “Giving taxpayers additional options strengthens the tax filing system,” he added.
Traditionally, conservatives have opposed measures to give the government more of a presence in tax filing, arguing that it would open Americans up to privacy concerns. In January, 13 Republican state attorneys general attacked Direct File as “unnecessary and unconstitutional,” saying that Americans “do not want to invite the proverbial fox into the hen house.”
“Forcing Americans to accept the IRS as their tax preparer, filer, and auditor isn’t a step forward,” Missouri House Republican Jason Smith said in October 2023.
As ProPublica reported in 2019, the for-profit tax preparation industry has spent millions of dollars lobbying on several issues, including a free electronic tax filing system, over the years. In 2023, OpenSecrets reported that Intuit had spent more than $45.7 million on federal lobbying since 1998, including $3.5 million in 2022.
H&R Block Director of Government Relations George Agurkis said in a statement that the company looks forward to engaging with the Trump administration and DOGE on “their ideas related to sound and efficient tax administration.”
An Intuit spokesperson told Quartz that “for decades, Intuit has publicly called for simplifying the U.S. tax code so individuals, families, and small businesses can better understand their finances.”
When asked about how much Intuit spends on lobbying, Intuit CEO Sasan Goodarzi told The Verge last month the company doesn’t “lobby against free.” Experts told the Post that the complexity of the tax code is one of the key issues preventing a free filing app from being created.
Goodarzi also argued that free tax filing “really is not relevant to our business,” pointing to Credit Karma — which Intuit acquired and later sold — and its lack of an impact on the tax industry. “Our view, by the way, very strongly, and we’ve been on the record, is that this is a solution looking for a problem. Free already exists,” Goodarzi added.
