Sen. Elizabeth Warren, a Democratic senator from Massachusetts, recently spoke out against tax prep software companies that may have unlawfully shared customer data with tech giants Google and Meta. Warren and a group of lawmakers have called on the Biden administration to investigate these allegations.
In a letter addressed to Attorney General Merrick Garland, Federal Trade Commission Chair Lina Khan, Internal Revenue Service Commissioner Daniel Werfel, and Treasury Inspector General for Tax Administration J. Russell George, the lawmakers highlighted key findings from their own investigation. These findings expanded upon earlier reports from The Markup and The Verge, which initially uncovered the data sharing. However, the FTC declined to comment on the letter, and the other agencies named have not yet responded.
According to the joint report from The Markup and The Verge, tax prep software companies TaxSlayer, H&R Block, and TaxAct were found to have shared sensitive financial information with Meta’s Facebook through a code called a pixel. This data included names, emails, and income information, which violated Meta’s policies. Additionally, TaxAct shared similar information with Google through its analytics tool, although the data did not include names.
Following these reports, both Meta and Google claimed to have policies in place to prevent customers and advertisers from sending them sensitive or identifying information. However, statements from the tax prep companies at the time implied that the data sharing was accidental.
Building on this initial reporting, Warren and her colleagues launched their own investigation. They discovered that millions of taxpayers’ information had been shared with big tech companies through the tax prep software. The lawmakers criticized both the tax prep companies and the tech firms for their “reckless” handling of sensitive information. Despite claims that the shared data would remain anonymous, experts believed it would not be difficult to connect the data to individuals.
In addition to Sen. Warren, Sens. Ron Wyden, Richard Blumenthal, Tammy Duckworth, Bernie Sanders, Sheldon Whitehouse, and Rep. Katie Porter joined the investigation and signed the letter. The lawmakers noted that while the tax prep companies may not have fully understood the privacy implications of installing Meta and Google’s tools, the tech platforms failed to provide sufficient information about how they would collect and use the gathered data. The lawmakers concluded that the filters in place to catch unintentionally collected sensitive data were ineffective.
The investigation also revealed that Meta’s tools used by TaxAct collected more information than previously reported, including the approximate amount of federal taxes owed by individuals. Furthermore, Meta confirmed that it used the data collected from tax software providers to target ads to taxpayers and train its AI algorithms.
The lawmakers argue that these findings suggest the tax prep companies may have violated taxpayer privacy laws, potentially resulting in criminal penalties. They called on the agencies to investigate and prosecute as necessary. They also mentioned that new policies, such as the recently announced IRS free direct file pilot, may help mitigate these issues in the future.
In summary, Sen. Elizabeth Warren and a group of lawmakers are urging the Biden administration to investigate allegations that tax prep software companies illegally shared customer data with tech giants Google and Meta. The lawmakers found that millions of taxpayers’ information had been shared, and they criticized both the tax prep companies and the tech firms for their handling of sensitive information. They believe that these actions may have violated taxpayer privacy laws and called for further investigation. Additionally, they mentioned that new policies could help prevent similar issues in the future.
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