WASHINGTON (CNN) -- The government Monday moved to prevent a proposed tax preparation merger, declaring consumers who prepare their income taxes would be harmed if H&R Block were allowed to acquire TaxACT.
The Justice Department said it is filing suit in Washington to stop H&R Block from buying TaxACT, a popular tax preparation software used by millions of consumers.
"We are blocking this transaction because the proposed merger would substantially lessen competition in the tax preparation software market, resulting in higher prices, lower quality, and reduced innovation," said Assistant Attorney General Christine Varney.
Varney said between 35 and 40 million taxpayers use do-it-yourself tax software. Ninety percent of the market is divided among three competitors, including second ranked H&R Block and third-ranked TaxACT. Their only major competitor is Intuit, maker of TurboTax and Quicken.
The Justice Department said in the 2010 tax season nearly 6 million customers used H & R Block At Home, and more than 5 million customers used TaxACT to prepare returns.
H&R Block (HRB), with headquarters in Kansas City, did not respond to the Justice Department action. 
