According to the press release, Square will pay USD 50 million in cash for Credit Karma Tax, which provides a free, do-it-yourself tax filing service for consumers. Besides, Cash App plans to offer the free tax filing service to millions of Americans.
Moreover, the acquisition provides an opportunity to further digitize and simplify the tax filing process in the US, expanding access to the one in three households which are unbanked or underbanked. The tax product will expand Cash App’s diverse 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 – giving customers another way to manage their finances from their pocket.
Furthermore, the completion of this transaction is subject to customary closing conditions. The parties expect to close the transaction before the end of 2020, and until close the two companies will continue to operate independently. Square was advised by Fenwick & West LLP and Cleary Gottlieb Steen & Hamilton LLP as legal advisors and Credit Karma was advised by Goldman Sachs & Co. LLC as financial advisor, with Skadden, Arps, Slate, Meagher & Flom LLP, and Wilson Sonsini Goodrich & Rosati serving as legal advisors.
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