2nd Story Software Continues Significant Growth and Completes $85 Million Recapitalization with TA Associates; Free Tax Software Pioneer Capitalizing on Growing Self-Preparation Market.

CEDAR RAPIDS, Iowa & BOSTON -- 2nd Story Software, Inc., the nation's pioneer in providing free online tax preparation software and electronic filing services, and TA Associates, a leading private equity and buyout firm, today announced that TA has completed an $85 million recapitalization of 2nd Story and has become a majority shareholder in the company. Current owners will maintain a significant minority interest in the company. Through its flagship product line, TaxACT(R), 2nd Story has become an innovator and a leader in the online tax preparation software and electronic filing markets.

TaxACT products, introduced in 1998, are available via the internet (www.taxact.com) to individual taxpayers and paid preparers as online tax preparation programs or as downloadable desktop software. 2nd Story pioneered the distribution of high quality free tax preparation software on the internet. It has built a rapidly growing and profitable business by upgrading free customers to paying customers by selling Deluxe and State versions of the software, as well as e-filing services. 2nd Story has been an industry leader in helping the Internal Revenue Service achieve key milestones in its objective of having 70% of all individuals file tax returns electronically by the tax year 2007.

"We are very pleased to partner with TA Associates," said Lance Dunn, President of 2nd Story Software. "As the 2004 tax season draws to a close, we are seeing record demand for online tax preparation software and the TaxACT brand. We are confident that TA's capital, connections and industry expertise will prove very beneficial in managing our rapid growth and further solidifying our leadership position as the leading innovator of low-cost tax preparation software and electronic filing services."

"Half of all Americans will e-file this year, and those who self-prepare and file electronically with software are the fastest growing segment of the tax preparation market," said Todd R. Crockett, a Principal at TA Associates who will join 2nd Story's Board of Directors. "The IRS has set targets for 70 percent of all individuals to file tax returns electronically by the year 2007. As the pioneer of free tax preparation software on the internet, TaxACT has supported this trend and captured an increasing share of these new customers."

Approximately 131 million individual tax returns are filed annually in the U.S. The cost of processing paper returns is high, so federal and state governments have proposed major initiatives to reduce manual processing in the tax filing system. The IRS has gone to great lengths to increase taxpayer access to e-filing, to make it as simple and inexpensive as possible, and to encourage private sector innovation and competition. In 2002, the IRS signed a public-private partnership agreement with the Free File Alliance, LLC, a group of tax software companies, to provide free electronic preparation and filing for at least 60 percent of all taxpayers who file an individual tax return. TaxACT has been a participant in the Alliance since its inception.

"Each software company participating in the Free File Alliance has its own eligibility requirements," said Kurt R. Jaggers, a Managing Director at TA Associates who also will join 2nd Story's Board. "While many companies limited their offers last year based on income, TaxACT was the only provider to make a free tax software offer to all taxpayers via the Free File Alliance. This year, other companies are following 2nd Story's lead, which is precisely the business model that TaxACT pioneered."

TA Associates has 37 years of investing experience, focusing on profitable, high growth companies. The firm has extensive expertise in the internet, software and services sectors, including investments in AzoogleAds, Datek Online Holdings (Ameritrade Holding Corporation), Expert Software, GlobeOp Financial Services, IntercontinentalExchange, Inc. (ICE(R)), ION Trading Group, The Island ECN (Instinet Group Incorporated), Lava Trading, Q UP (S1 Corporation) and WebSideStory, Inc.

Goodwin Procter LLP served as legal counsel for TA Associates. Cedar Rapids-based Shuttleworth & Ingersoll PLC provided legal counsel to 2nd Story Software. Minneapolis-based investment bank Greene Holcomb & Fisher advised 2nd Story in the transaction.

2nd Story Software, Inc.

2nd Story Software, Inc. is a privately-held company founded in 1998 and is the foremost leader in developing and marketing affordable tax preparation software and Web-based services direct to end consumers. Via the Web, TaxACT includes the flexibility of online tax preparation services, as well as the availability of downloadable desktop software. To date, the comprehensive suite of TaxACT products have enabled over 13 million tax returns to be filed and continues to empower its users to make well-informed decisions with ease, while looking out for the cost-conscious. More information regarding 2nd Story and the TaxACT product line may be found by visiting www.TaxACT.com.

TA Associates

Founded in 1968, TA Associates is one of the largest and most experienced private equity and buyout firms. With offices in Boston, Menlo Park and London, the firm manages $6 billion in capital and has invested in more than 350 companies. TA Associates provides growth equity capital, leveraged recapitalization and management buyout financing primarily for technology, financial and business services, healthcare and consumer businesses. More information about TA Associates can be found at www.ta.com.

Safe harbor statement under the U.S. Private Securities Litigation Reform Act of 1995: Statements made in connection with this release which are not historical fact, such as forward-looking statements concerning future financial performance and growth, involve risk and uncertainties. Such statements are subject to various factors that could cause actual results to differ materially from those set forth in the forward-looking statements. Any forward-looking statements represent the best judgment of 2nd Story Software, Inc., and/or TA Associates as of the date of this release. 2nd Story Software Inc., and TA Associates each disclaim any intent or obligation to update any forward-looking statements.