Google and Meta got customer data from tax prep firms
Senator Elizabeth Warren is leading a group of lawmakers calling on the Biden administration to investigate possible illegal sharing of customer data by tax prep software companies.
Attorney General Merrick Garland, Federal Trade Commission Chair Lina Khan, Internal Revenue Service Commissioner Daniel Werfel, and Treasury Inspector General for Tax Administration J. In addition to the reporting from The Markup and The Verge, which initially revealed the data sharing, the lawmakers provided key findings from their own investigation. A request for comment was not immediately responded to by the FTC or the other agencies named in the letter.
Last year, the publications reported that tax prep software companies TaxSlayer, H&R Block, and TaxAct shared sensitive financial information with Meta’s Facebook through pixels. In violation of Meta’s policies, Meta pixel trackers sent names, emails, and income information to Meta.
Additionally, TaxAct sent similar information to Google through its analytics tool, but the information did not include names.
In response to CNBC’s initial report, Meta and Google both confirmed they have policies against customers or advertisers sending them sensitive information. It appeared the tax prep companies shared data accidentally, according to statements they provided to publications at the time.
Following up on the original report, the group of seven lawmakers investigated the extent of data sharing. The lawmakers found that millions of taxpayers’ information had been shared with Big Tech firms through tax prep software, and that both tax prep companies and tech firms handled sensitive information “recklessly”. In spite of the companies’ assurances that the data would be anonymous, the lawmakers found that experts believed it would not be difficult to identify individuals from the data.
Warren was joined in the investigation and letter by Sens. Ron Wyden, D-Ore., Richard Blumenthal, D-Conn., Tammy Duckworth, D-Ill., Bernie Sanders, I-Vt., Sheldon Whitehouse, D-R.I., and Rep. Katie Porter, D-Calif.
According to lawmakers, Meta and Google failed to provide enough information about how they would collect and use the information gathered through their tools even though the tax prep companies installed their tools without fully comprehending their privacy implications. Meta and Google both claim they have filters to catch sensitive data collected inadvertently, but they appear to be ineffective, according to lawmakers.
Meta tools used by TaxAct allegedly collected even more data than previously reported, including the approximate amount of federal taxes a person owed. Meta confirmed that it used data collected from tax software providers “to target ads to taxpayers, including for companies other than tax preparation companies.”
Their findings indicate the tax prep companies “may have violated taxpayer privacy laws,” which could result in criminal penalties “up to $1,000 per instance and up to a year in prison.”
The lawmakers noted that new policies may mitigate the issues in the future by requiring the agencies to investigate and prosecute where necessary.
They also welcomed the IRS’ recent announcement of a free direct file pilot for next year, which will allow taxpayers to file taxes without sharing their data with unsafe or incompetent tax preparation firms.