• by Jack Loechner , Staff Writer @mp_research, April 26, 2003

Online Tax Services Attract More Than 22 Million Users Beginning in February

Nielsen//NetRatings initial reports show that more than 22 million Internet users visited an online tax services site in February 2003, an increase of 15 percent year-over-year, outpacing the 11 percent growth rate of the general finance, insurance, and investments category. Reaching more than 17 percent of the active online population from home and work, more Americans than ever are leveraging Internet tax resources.

The online tax services sector continues to expand its reach. The U.S. Internal Revenue Service led the group, attracting 10.1 million unique visitors from home and work, a 25 percent increase year-to-year. TurboTax garnered the second largest unique audience with 6.8 million visitors, representing a 20 percent increase in traffic from the same period in 2002. HRBlock.com drew close to three million surfers. TaxAct.com, offering a lower priced alternative to the big named services, posted more than two million unique visitors. Rounding out the top five was H&R Block's wholly owned online alternative TaxCut.com, with 1.7 million unique visitors.

"In comparison to the overall finance, insurance and investment category, the online tax services segment continues to post above average unique audience growth," said Patrick Thomas, senior Internet analyst, Nielsen//NetRatings. "Much of the growth is being generated by taxpayers without extensive online tenure who are turning to the Web for the first time to file their taxes," added Thomas. "This suggests a market opportunity for financial companies with minimal tax services offerings to convert these online tax-filers into consumers of other online financial products and services."

Top Online Tax Services, Ranked by Unique Audience February 2003 (U.S., Home and Work)

Category	Unique Audience (000) Feb-02	Unique Audience (000) Feb-03	% Growth
Online Tax Services Sector	19,449	22,324	15%
U.S. Internal Revenue Service (IRS.gov)	8,090	10,104	25%
TurboTax	5,695	6,819	20%
HRBlock.com	3,241	2,958	-9%
TaxAct.com	1,171	2,049	75%
TaxCut.com	1,425	1,755	23%

Middle income surfers claim the bulk of web tax services activity. Among the top online tax services, households earning between $25K-$49,999K and $50K-$74,999K comprised the highest compositions, making up roughly 60-65 percent of the total audience. Surfers with higher household incomes in the $100K+ range represented much less.

Composition Percent Breakdown for Top Online Tax Services, February 2003 (U.S., Home and Work)

Income	IRS.gov	TurboTax.com	HRBlock.com	TaxCut.com	TaxAct.com
$ 0 - 24,999	6.53%	5.65%	7.28%	3.06%	8.17%
$ 25,000 - 49,999	31.04	26.15	36.55	29.73	36.67
$ 50,000 - 74,999	29.64	32.34	31.18	32.00	29.44
$ 75,000 - 99,999	16.67	16.99	15.85	15.32	17.62
$ 100,000 - 149,999	10.36	13.61	7.45	13.28	5.75
$ 150,000+	3.85	3.89	1.17	5.57	1.08

Source: Nielsen//NetRatings, February 2003

"Computer based software and Internet tax preparation services have changed the way Americans prepare their taxes," said Thomas. "It's become an easy and affordable option for many surfers within the middle income brackets who most often put a premium on ease of completion and know the Internet can also help them get their refund quickly."