Tax-Prep Firms Face a Severe ‘5-Alarm Fire’

Some members of Congress are urging for criminal charges to be filed against major tax-preparation companies in the US for allegedly sharing taxpayers’ protected data with Google and Meta. H&R Block, TaxSlayer, and TaxAct are accused of sharing private information, such as gross income, tax refund amounts, and details about government programs and tax breaks, through tracking pixels on their website forms. A congressional report states that “every single taxpayer who used their websites to file their taxes could have had at least some of their data shared,” according to CNN Business.

The report, compiled by seven legislators led by Democratic Senator Elizabeth Warren, reveals that the data was sent to Google and Facebook without user consent or disclosure. The investigation, sparked by The Markup’s reporting, could potentially lead to government and private lawsuits as well as criminal penalties. Legal experts believe that this could spell the end of the tax-preparation firms. Georgetown University law professor David Vladeck described the situation as a “five-alarm fire” and rated it as a “15” on a scale of one to ten, according to CNN.

According to the report, the tax-preparation firms claim they did not fully understand the extent to which they were sending taxpayer data to tech firms. Meta, however, said that it instructs partners not to use its tools to share sensitive information and that its systems are designed to filter out potentially sensitive data. Investigators found that Meta used the data to show targeted ads to its users and to train artificial intelligence algorithms. It is unclear if Google used the data for commercial purposes, but the company stated that it has strict policies against advertising to people based on sensitive information. (Read more tax preparer stories.)