Credit Karma, Intuit’s $7.1B purchase earlier this year is now subject to review by the US Department of Justice. The department is concerned about possible antitrust issues.
That is if Intuit, owner of TurboTax, QuickBooks, and Mint is allowed to take over a former rival. Its rival offered free tax preparation tools that were directly in competition with Intuit’s own offering.
The DOJ’s lawyers are concerned about the influence that Intuit’s purchase of Credit Karma will have on consumer tax preparation platforms and the software market.
The DOJ has requested both Intuit and Credit Karma to provide more information. That is before it rules on whether to allow the merger to go through.
Credit Karma was founded in 2007. It made its mark as a company offering services like free credit checks.
It made one of its biggest expansions yet, in 2017, adding free tax filing to its list of services.
That’s a potential threat to companies like Intuit, which controls roughly two-thirds of the tax preparation market. It makes billions of dollars a year by providing tax filing services to Americans.
TurboTax, as well as other major tax companies, like H&R Block, already offered free filing options for years thanks to the IRS Free File program, which promises free tax filing.
That’s free tax filing for anyone with an adjusted gross income of $69,000 or less. In return, the IRS promised it wouldn’t create its own free tax product.
Department of Justice: Turbotax has come Under Fire
Intuit, H&R Block, as well as other companies haven’t been particularly forthcoming about offering these programs to users. To offset its losses from changes in the tax laws, TurboTax intentionally pushed low-income taxpayers toward its pricier products. That’s instead of the Free File version of its software.
Reports said Intuit was also caught hiding its Free File service from Google search results. It was pointing customers toward standard free service instead.
This almost always requires taxpayers to upgrade to a paid tier to submit their federal and state taxes. The IRS has already started to fight back against such practices.
It is amending the Free File program to prohibit hiding Free File services from search results and require clearer branding. That is to highlight the Free File version of their software as opposed to other free options.
The IRS has also eliminated the restriction against the organization making its own competing free filing software.
Intuit refuted the idea that the merger is about eliminating competition. An Intuit spokesman said that this combination is not about tax.
The company said they are confident in the clear consumer and competitive benefits of their combination and they look forward to continued engagement with regulators.
Meanwhile, Intuit Inc. has agreed to acquire TradeGecko. It is a Singapore-based inventory and order management software platform for small retailers and wholesalers in more than 100 countries.
The Mountain View, California-based firm will integrate TradeGecko’s system into its QuickBooks accounting suite. That is to help sellers manage their orders and inventory, according to a blog post.
Reports say the transaction is expected to close in September.
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