Tax prep firms shared private data from millions of customers with Meta and Google, lawmakers say

Tax preparation firms shared private data from tens of millions of customers with tech giants including Meta and Google in a potential violation of federal law, a congressional investigation has found.

The probe, led by Senator Elizabeth Warren, accused H&R Block, TaxSlayer and TaxAct and others of using tracking technology embedded on their websites to send personal data such as people’s names, gross income, phone numbers and email addresses to tech giants that was later used for targeted advertising.

The Democratic lawmakers urged the Department of Justice, the IRS and the Federal Trade Commission to “immediately open an investigation” into the tax software firms, Facebook’s parent company Meta and Google.

The allegations were first raised last year by investigative journalism outlet The Markup, which found the sensitive financial information had been shared using an analytics tool known as a tracking pixel.

The Markup article claimed that the pixel trackers sent data to Meta in violation of the social media firm’s policies.

TaxAct also allegedly shared information with Google, however this did not include customer’s names.

The lawmakers claimed that “every single taxpayer” who used the three tax preparation firms to file their returns likely had at least some of their data shared.

In a statement to the Associated Press, a Meta spokesperson said its policies clearly state that advertisers “should not send sensitive information about people through our Business Tools.”

“Our system is designed to filter out potentially sensitive data it is able to detect,” the company said.

A TaxSlayer spokesperson said the lawmakers’ report “contains numerous false or misleading statements”.

H&R Block said it had taken steps to avoid the sharing of sensitive data through Pixel.

A TaxAct representative told The Independent it had provided Senator Warren with “transparent, detailed explanations on our use of these standard analytics tools”. 

“TaxAct has always complied with laws that protect our customers’ privacy and, as noted in the report, we disabled the tools in question while we evaluated potential concerns.”

The report was prepared by the offices of Senators Elizabeth Warren, Ron Wyden, Richard Blumenthal, Tammy Duckworth, Bernie Sanders, Sheldon Whitehouse and Congresswoman Katie Porter.

It focused largely on Meta, which has a long history of failing to protect users’ data.

In 2018, it was exposed for sharing millions of individuals’ personal information with Cambridge Analytica, which helped the Trump campaign target voters during the 2016 presidential election.

Facebook paid $725m to settle the case, and was later fined $5bn by the Federal Trade Commission.

Tax preparation firms could face billions of dollars in fines if they were found to have violated US tax laws, experts say.

“This is as great as any privacy breach that I’ve seen other than exploiting kids,” David Vladeck, Georgetown University law professor told CNN.

“This is a five-alarm fire, if what we know about this so far is true.”