Tax Software Dropped in H&R Block Deal

Microsoft has stopped all development on its TaxSaver tax preparation software. In its place, Microsoft will promote H&R Block’s Kiplinger TaxCut software and Web-based tax preparation services. This is an abrupt end for a product that has been on the U.S. market for less than four months. Coming shortly after the sale of TransPoint bill payment service, the move suggests that Microsoft will rely more on partners to compete with Intuit in the personal finance market. Microsoft will also work with H&R Block to enable importing of TaxSaver data into TaxCut, and to support Microsoft Passport on H&R Block’s tax Web site.

TaxSaver debuted in the United Kingdom in the summer of 1999 and arrived in the United States the following December. It had a significant handicap in the U.S. market: it doesn’t support state income tax preparation, a feature provided by deluxe versions of TaxCut and Intuit’s TurboTax. Microsoft also doesn’t offer a Web-based tax preparation service to compete with the US$9.95 Web services offered by Intuit and H&R Block. In fact, Microsoft’s MSN MoneyCentral site refers users to H&R Block’s service.