Lawmakers Query Tax Prep, Tech CEOs About Taxpayer Data Sharing
Congressional Democrats are seeking answers in response to reporting that several tax preparation software companies discreetly sent sensitive taxpayer data to Meta and Google.
“If true, this is an appalling breach of users’ trust and a potentially illegal abuse of sensitive taxpayer data that raises questions about the misuse of data by the tax preparation companies and about the role of Google in facilitating these abuses,” the lawmakers said in a December 14 letter to Google CEO Sundar Pichai.
“Given these new reports, we seek a full accounting of and explanation for the disclosure of taxpayer data to Google,” the lawmakers said.
That letter and others sent to the heads of Meta, H&R Block, Intuit, TaxAct, and Tax Slayer request answers by January 3, 2023.
The letters were signed by Senate Finance Committee Chair Ron Wyden, D-Ore., and members Elizabeth Warren, D-Mass., and Sheldon Whitehouse, D-R.I.; Sens. Tammy Duckworth, D-Ill., Bernie Sanders, I-Vt., and Richard Blumenthal, D-Conn.; and Reps. Katie Porter, D-Calif., and Brad Sherman, D-Calif.
A November 22 article from the news website The Markup detailed how H&R Block, TaxAct, and TaxSlayer have been transmitting sensitive financial information to Facebook through a code called the Meta Pixel, which includes names, email addresses, and data on users’ income, filing status, refund amounts, and dependents’ college scholarship amounts. The Markup found similar financial data — although not names — being sent to Google by TaxAct.
The lawmakers said they hope the IRS and possibly the Department of Justice will act to impose penalties if they are warranted.
Daniel Hemel of the New York University School of Law said that the IRS “definitely can penalize tax preparers for knowingly or recklessly disclosing confidential taxpayer information.”
The IRS and Justice Department didn’t respond to requests for comment by press time.
Observing that tax preparation companies like Intuit, H&R Block, TaxAct, and TaxSlayer have “spent millions lobbying the U.S. government to ensure that tax filing is outsourced to them” from the IRS through the Free File program, the lawmakers said the allegations show “significant new risks from this arrangement.”
In the letter to Intuit CEO Sasan Goodarzi, the lawmakers said that while they appreciate that the company’s TurboTax site wasn’t found to have sent financial information to Facebook, “the reported sharing of such data by other tax preparation companies . . . raises significant questions about whether Congress and the Administration should act to limit the role of predatory private tax preparation companies.”
The Free File program came under scrutiny after a 2019 ProPublica investigation unearthed that Intuit and H&R Block had intentionally blocked the free service from being picked up by search engines. Both companies have since quit the program.
A provision in the Inflation Reduction Act (P.L. 117-169) includes $15 million for a study of implementing an IRS-run free return filing system. Under the law, an IRS task force must deliver a report to Congress within nine months.
A spokesperson for H&R Block said the company “has removed Pixels from its DIY online product to prevent client tax information from being collected.”
An Intuit spokesperson said in a statement that the company’s “use of Meta Pixel is compliant with the law governing the use and disclosure of tax return information.”
“Intuit does not share tax return information with social media platforms, including Meta (Facebook), for marketing or any other purpose. The Meta Pixel does not track, gather, or share information that users enter in TurboTax while filing their taxes,” the spokesperson said.
The other tax return preparation companies that received letters couldn’t be reached for comment by press time.
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Tax Notes Federal, Dec. 19, 2022, p. 1754
177 Tax Notes Federal 1754 (Dec. 19, 2022)
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