ACN Stock Alert: Accenture Lands Massive IRS Deal

Supporting efforts to streamline and speed up tax preparation, the Internal Revenue Service (IRS) award-winning information technology (HE) service and consulting specialist Accenture (NYSE:ACN) with a global purchase agreement to modernize tax administration systems. Despite the intrigue, ACN stock slipped almost 1% in the early afternoon.

At the surface level, the news should be a significant boost for Accenture and, on a sentimental basis, for millions of taxpayers. Generally speaking, Americans have an aversion to paying taxes, in part because of the underlying complexities. However, while the IRS contract theoretically benefits ACN stock, the devil is in the details.

ACN Stock appears to secure a critical win

According to a Reuters report, Accenture Federal Services revealed that it has signed a settlement worth up to $2.6 billion with the IRS. Although the contract was awarded for a period of seven years, he added that “…he will have to compete for future orders to help the IRS create new ways for taxpayers and professionals to interact. with the agency.

Earlier this month, the IRS announced it would launch a free service, allowing taxpayers to file directly with the agency. Further away, Reuters reports that this initiative could lead to the launch of a full-scale IRS filing system. Naturally, such an upgrade would compete with private tax preparers, including Intuitive (NASDAQ:INTU) and its TurboTax program.

Although the market did not react impressively to the ACN stock, it aggressively attacked INTU, which fell more than 7%. “It’s really not a threat at all,” said Intuit CEO Sasan Goodrazi. Reuters mentioned that Goodrazi alluded to an IRS exploratory study that showed that 72% of US taxpayers surveyed were “very interested” or “somewhat interested” in using a government tool to file their tax returns electronically.

However, this is also where ACN stock can run into friction.

Not a completely relevant idea

Although the deal with Accenture looks like a breakthrough on paper, it may run into a problem of relevance. In January 2020, Ars-Technica reported that the IRS had abandoned its long-standing promise not to compete with TurboTax. So news of the tax agency promoting its own in-house service didn’t completely shock industry watchers.

More importantly, several free deposit programs exist for people with incomes below $69,000 (about 70% of the US population). The remaining 30% is where the tax preparation industry really makes a living.

Additionally, changes in the workplace – such as the booming gig economy – can expand this segment by 30%. It is also in this space that the burden of the complexities of the tax system falls on taxpayers, which in turn prevents tax advisory firms like H&R block (NYSE:HRD) in the business.

Subsequently, HRB was the biggest gainer in the mid-week session, up around 3%.

As of the date of publication, Josh Enomoto had no position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.