A recent Congressional investigation has unveiled alarming findings regarding the sharing of sensitive tax-filing data by several tax preparation providers with tech giants Meta and Google. The investigation, prompted by a report from The Markup, shed light on the use of Meta’s Pixel tracking tool by companies such as TaxSlayer, H&R Block, and TaxAct to collect private information from users, including filing status, adjusted gross income, refund amount, dependents’ names, and even the specific fields users clicked on. Meta, formerly known as Facebook, is already facing a lawsuit related to this data privacy breach.
The Congressional panel has forwarded its conclusions to several government agencies, including the Internal Revenue Service (IRS), Federal Trade Commission (FTC), Department of Justice (DOJ), and the Treasury Inspector General for Tax Administration (TIGA), urging them to investigate the matter and take appropriate legal action if necessary. In their report, the panel expressed concern about the reckless sharing of taxpayers’ personal and financial data by major tax preparation companies and big tech firms like Meta, which may have violated privacy laws and infringed on taxpayers’ rights.
Furthermore, the investigation revealed that the Meta Pixel tracker also collected data about users’ visits to pages related to various tax situations, such as having dependents, specific types of income (e.g., rental income, capital gains), and certain tax credits or deductions. Moreover, it transmitted hashed values of users’ full names, email addresses, country, state, city, zip codes, phone numbers, and gender. Shockingly, this data was even collected from users accessing TaxAct’s Free File service, which operates in partnership with the IRS.
The members of Congress involved in the investigation and report include Senators Elizabeth Warren (D-MA), Ron Wyden (D-OR), Richard Blumenthal (D-CT), Tammy Duckworth (D-IL), Bernie Sanders (I-VT), Sheldon Whitehouse (D-RI), and Representative Katie Porter (D-CA). They concluded that the tax preparation firms displayed a shocking lack of care in their handling of taxpayer data. The companies installed Meta and Google tools on their websites without fully understanding the extent to which user data would be sent to these tech firms. They also failed to consult with independent compliance or privacy experts and had limited knowledge of how Meta would use and dispose of the data. The panel also criticized Meta and Google for their apparent disregard for taxpayer privacy.
The report highlighted relevant laws stating that tax return preparers cannot disclose or use a taxpayer’s tax return information without obtaining written consent from the taxpayer. However, the tax preparation companies in question failed to fulfill this requirement. While tax-filing companies are allowed to share data with auxiliary service providers for tax preparation purposes, the panel argued that neither Meta nor Google fall into this category since the tracking was primarily used for advertising. Violations of these laws can result in fines of up to $1,000 per instance and imprisonment of up to one year, although such penalties may be insignificant for these large companies.
The investigation and subsequent report have brought significant attention to the issue of data privacy in the tax preparation industry. The findings underscore the need for stricter regulations and oversight to safeguard taxpayers’ personal and financial information. It also raises important questions about the practices of big tech firms and their handling of user data. Moving forward, it is crucial for government agencies to thoroughly investigate these violations and take appropriate action to protect taxpayer privacy rights. Additionally, tax preparation companies must prioritize transparency and actively ensure that user data is handled securely and with explicit consent from taxpayers.
