Square is buying the tax business of Credit Karma for $50 million to bring do-it-yourself tax filing to its Cash App customers. The deal has seen Credit Karma's acquisition by Intuit cleared by the Department of Justice.
The all-cash deal will expand Cash App’s ecosystem of financial tools — which currently includes peer-to-peer payments, Cash Card, direct deposit, as well as fractional investing in traditional stocks and bitcoin.
The number of taxpayers who self prepare and e-File their own tax returns has grown in recent years. According to the IRS, in the 2020 tax filing season, approximately one in two tax filers, or 80 million people, prepared and electronically filed their federal tax returns themselves, with an average refund of more than $2,000.
Brian Grassadonia, Cash App lead, says: “We created Cash App to provide more access to the masses of people left out of the financial system and are constantly looking for ways to redefine our customers’ relationship with money by making it more relatable, instantly available, and universally accessible.”
The move to offload Credit Karma's tax business has prompted the Department of Justice to clear its planned $7 billion acquisition by another tax software provider, Intuit.
Sasan Goodarzi, CEO, Intuit, says: “We are pleased to have cleared this necessary regulatory review with DOJ and appreciate their careful consideration of this transaction. Consumers will continue to benefit from the Credit Karma Tax product as part of Square.”
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