Major tax prep companies TaxSlayer, H&R Block, and TaxAct have been accused of sharing “millions of taxpayers’ data” with Meta and Google by a July 2023 Congressional report.
All three services had been found to be using tracking pixels, which were sharing information like filing status, approximate adjusted gross income, approximate refund amount, names of dependents, types of income, and approximate federal tax owed. In some cases, full names, emails, addresses, phone numbers, and genders were being shared as hash values.
According to the report, the companies on both sides of the tracking pixels claim that the harvested data is anonymous, but experts believe that stringing different elements together can reveal users’ identities, likely for advertising purposes.
Tax prep companies share data and break the law
Legislation states that “a tax return preparer may not disclose or use a taxpayer’s tax return information prior to obtaining a written consent from the taxpayer,” and failure to comply can result in fines of up to $1,000 and one year imprisonment for each case.
Because of the way the American tax system is set up in that citizens are responsible for filing their own returns, as many as four in five have turned to online services to get it done more quickly.
Return-free systems, commonly seen in other countries, are typically more efficient and prevent as many errors, but American tax return companies have spoken out in favor of the existing setup, which is now revealed to have facilitated data sharing, possibly boosting companies’ revenues.
Responsible for vast amounts of data transmission to date are the Meta Pixel and Google Analytics, but it appears that different versions of these tracking pixels have been utilized to varying degrees.
A separate letter addressed to federal agencies concludes by describing the act as the “outrageous and potentially illegal sharing of taxpayers’ sensitive personal and financial information with Meta by online tax preparation companies.”
The six Senator and one Member of Congress signatories prompt The Internal Revenue Service, the Treasury Inspector General for Tax Administration, the Federal Trade Commission, and the Department of Justice to investigate, urging the free direct file pilot to go ahead as a means to prevent third parties from getting unwanted access to tax data.
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