The report from Congressional Democrats said H&R Block, TaxAct and TaxSlayer provided information on tens of millions of taxpayers to the company.
WASHINGTON — A group of Democrats reported Wednesday that three major tax preparers sent “extremely sensitive” information about tens of millions of taxpayers to Parent company Facebook Meta for at least two years.
Their report calls on federal agencies to investigate and potentially go to court into the vast amount of information H&R Block, TaxAct and TaxSlayer shared with the social media giant.
In a letter to the heads of the IRS, the Justice Department, the Federal Trade Commission and the IRS watchdog, the seven lawmakers said their findings “reveal a shocking violation of the law.” on taxpayer privacy by tax preparers and big Tech companies.”
Their report said highly personal and financial information about the taxpayer’s source of income, deductions and exemptions was accessed by Meta when taxpayers used tax software to file their taxes.
That data arrives at Meta through a Pixel code that tax companies have installed on their websites to collect information on how to improve their own marketing campaigns. In turn, Meta can access the data to write targeted algorithms for its own users.
The report said the program collected information about tax filing status, income, refund amounts, names of dependents, approximate federal tax debt, buttons clicked on the preparer’s website taxes and the names of the text entry forms that taxpayers navigate.
The letter to federal agencies was signed by Senators Elizabeth Warren, Ron Wyden, Richard Blumenthal, Tammy Duckworth, Bernie Sanders and Sheldon Whitehouse, and Representative Katie Porter. The lawmakers urged the agencies to “immediately open an investigation into this incident.”
They asked the agencies to investigate “and prosecute any company or individual that breaks the law,” saying that could lead to billions of dollars in criminal liability for the companies.
The Markup, a technology-focused nonprofit press agency, initial report about data sharing between tax firms and Meta in November. TaxAct later told The Markup that it “takes the privacy of customer data very seriously” and “works to comply with all regulations” regulations of the IRS.” TaxSlayer later said customer privacy was “most important” and that it removed the Pixel to evaluate its use.
H&R Block said Wednesday that it takes protecting customer privacy very seriously and has taken steps to prevent information sharing through Pixel encryption.
And Meta says its policy clearly states that advertisers “should not submit sensitive information about people through our Business Tools”.
“Doing so is a violation of our policies, and we teach advertisers how to properly set up Business tools to prevent this from happening,” the company said in an emailed statement. “Our system is designed to filter out potentially sensitive data that it can detect.”
Representatives from the IRS, DOJ, FTC and IRS watchdog also did not immediately respond to requests for comment.
Democrats say their report serves as an argument for creating a free electronic file system to file tax returns will be run by the government, which the IRS is currently piloting.
The IRS plans to launch a pilot program for the 2024 tax filing season to test the “live filing” system and help the federal government decide whether to continue implementing the system in the future. .
The IRS in May published possible report given the taxpayer’s interest in direct filing, how the system might work, potential costs, operational challenges, etc.
The report shows that the majority of taxpayers surveyed would be interested in using an IRS-provided tool to file and file taxes electronically — nearly 50% of respondents prefer the IRS’s free tax return option than commercial tax preparers say they prefer to provide their financial information directly to the IRS rather than to a third party.