H&R Block shared taxpayers data with Meta: lawmakers
Tax Prep Firms Accused of Sharing Highly Sensitive Taxpayer Data with Meta, Prompts Congressional Democrats to Call for Investigation
Three major tax preparation firms, H&R Block, TaxAct, and TaxSlayer, have sent “extraordinarily sensitive” information on tens of millions of taxpayers to Meta, the parent company of Facebook, over a span of at least two years, according to a report released by a group of congressional Democrats on Wednesday. Concerned about the breach of taxpayer privacy, the lawmakers are urging federal agencies, including the Internal Revenue Service (IRS), the Department of Justice (DOJ), the Federal Trade Commission (FTC), and the IRS watchdog, to investigate the matter and potentially take legal action. The report reveals that Meta was able to access highly personal and financial information, such as sources of income, tax deductions, and exemptions, as taxpayers used the tax software provided by these companies. This information was transmitted to Meta through its Pixel code, which the tax firms installed on their websites to enhance their marketing campaigns. In return, Meta gained access to the information to develop targeted algorithms for its own users.
Senators Elizabeth Warren, Ron Wyden, Richard Blumenthal, Tammy Duckworth, Bernie Sanders, and Sheldon Whitehouse, along with Representative Katie Porter, have collectively signed a letter to federal agencies, pushing for an immediate investigation into the incident. The lawmakers urge the agencies to prosecute any company or individuals found to have violated the law and emphasize the potential for billions of dollars in criminal liability for the firms involved. The Markup, a nonprofit journalism outlet specializing in technology, first reported on the data-sharing between tax firms and Meta in November. While TaxAct claims to take customers’ data privacy seriously and comply with IRS regulations, TaxSlayer has removed the Pixel code to assess its use, and H&R Block states that it has implemented measures to prevent the sharing of information through Pixel coding.
Meta responded to the allegations, stating that it has been clear in its policies that advertisers should not transmit sensitive information through their Business Tools. The company claims to educate advertisers on proper setup to avoid such instances and asserts that its system filters out potentially sensitive data it detects.
The IRS, DOJ, FTC, and IRS watchdog have not yet responded to requests for comment on the matter.
Lawmakers argue that the incident underscores the need for an electronic free-file system for tax submissions managed by the government. The IRS is already piloting a “direct file” system and plans to launch a program in the 2024 filing season to test its feasibility. The system would allow taxpayers to prepare and file their taxes electronically directly through the IRS, potentially mitigating concerns about data breaches and privacy issues associated with third-party tax preparation firms.
FAQs:
1. How did tax preparation firms share sensitive taxpayer information with Meta?
– The tax preparation firms, H&R Block, TaxAct, and TaxSlayer, installed Meta’s Pixel code on their websites, allowing Meta to collect highly personal and financial information as taxpayers used the tax software provided by these firms.
2. What kind of information did Meta access through this data-sharing arrangement?
– Meta had access to information such as sources of income, tax deductions, exemptions, filing status, refund amounts, names of dependents, and various other data collected during the tax preparation process.
3. What action are the congressional Democrats urging federal agencies to take?
– The lawmakers are calling for an investigation into the incident and potential prosecution of companies or individuals found to have violated the law. They emphasize that the firms involved could face billions of dollars in criminal liability.
4. What is the response from the tax preparation firms and Meta?
– TaxAct claims to take customer data privacy seriously and comply with IRS regulations. TaxSlayer has removed the Pixel code to evaluate its use, and H&R Block has implemented measures to prevent information sharing via Pixel coding. Meta states that advertisers should not transmit sensitive data and that its system filters out potentially sensitive information.
5. How is the incident being viewed in terms of taxpayer privacy concerns?
– The incident has prompted lawmakers to reiterate the need for an electronic free-file system managed by the government, which would allow taxpayers to directly submit their taxes to the IRS. This would address concerns about data breaches and privacy issues with third-party tax preparation firms.
Lawmakers informed that H&R Block shared taxpayers’ data with Meta
Three major tax preparation companies, H&R Block, TaxAct, and TaxSlayer, have come under fire for sharing sensitive taxpayer information with Meta, the parent company of Facebook. A group of congressional Democrats released a report on Wednesday, urging federal agencies to launch an investigation into the breach of taxpayer privacy. According to the report, these tax firms provided Meta with highly personal and financial data, including information on income sources, tax deductions, and exemptions, as taxpayers used their software to prepare their taxes. This data was collected through Meta’s Pixel code, installed on the tax firms’ websites to enhance their marketing campaigns. In return, Meta gained access to the information to create targeted algorithms for its users.
The report, signed by seven lawmakers, including Sens. Elizabeth Warren and Bernie Sanders, calls for immediate action and the prosecution of any individuals or companies found to have violated the law. They argue that these violations could result in billions of dollars in criminal liability for the tax firms. The lawmakers also highlight the need for an electronic free-file system for tax returns, which would be run by the government. The IRS is currently piloting such a system and plans to launch a pilot program in the 2024 filing season to assess its viability.
H&R Block, TaxAct, and TaxSlayer have responded to the allegations, with H&R Block stating that it takes client privacy seriously and has implemented measures to prevent data sharing through Pixel coding. Meta, on the other hand, claims that its policies explicitly prohibit advertisers from sending sensitive information and that it educates advertisers on proper setup to prevent such incidents. The IRS, Department of Justice, Federal Trade Commission, and IRS watchdog are yet to comment on the matter.
The Democrats’ report highlights the growing need for stricter regulation and safeguards to protect taxpayer privacy. It also underscores the potential benefits of an electronic free-file system, allowing taxpayers to directly submit their returns to the government. As this issue continues to unfold, it remains crucial to stay focused on the topic and thoroughly investigate the breach of taxpayer privacy.