H&R Block and other tax preparation companies have been implicated in the unauthorized sharing of sensitive personal and financial data with Meta and Google. This revelation comes from a recent report by a group of U.S. lawmakers including Senators Elizabeth Warren and Bernie Sanders, who conducted an investigation into the practices of H&R Block, TaxAct, and TaxSlayer following an article in The Verge last year.
The investigation found that these tax-preparation companies utilized a code called Meta Pixel to transmit personal data to both Meta and Google. The code was collecting a significant amount of information, including users’ names, filing status, income, tax refund amounts, dependents’ names, and federal tax owed, among other details.
The lawmakers argue that sharing taxpayer information without consent constitutes a breach of privacy and violate both taxpayers’ rights and privacy laws. Therefore, they called for a thorough investigation by federal agencies and the prosecution of any party involved in these privacy violations.
H&R Block responded to the allegations by stating that they take their clients’ privacy seriously and have implemented measures to prevent information sharing through pixels. On the other hand, Meta stated that their policies strictly prohibit the transmission of sensitive information through their Business Tools and they educate advertisers on proper setup to avoid such occurrences. Google, TaxAct, and TaxSlayer have not yet commented on the matter.
Competition from the IRS
The investigation coincides with the IRS’s efforts to develop its own free electronic tax-filing system as a potential competitor to popular tax-preparation programs like TurboTax and H&R Block. The pilot program for the IRS’s system is set to launch in early 2024.
Americans spend an average of $250 and 13 hours each year filing their taxes, making tax preparation a lucrative industry. Although free tax prep services are available for individuals earning less than $73,000 annually, only a small percentage of Americans take advantage of this option. The report also highlights the significant financial investment made by tax-prep companies to oppose free filing systems.
According to the lawmakers, the investigation underscores the pressing need for the IRS to develop its own online tax filing system to protect taxpayer privacy and provide a viable alternative for filing tax returns.
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