It's a '5-Alarm Fire' for Tax-Prep Firms

H&R Block, others allegedly shared millions of taxpayers' private info with tech firms
By Arden Dier,  Newser Staff
Posted Jul 12, 2023 11:40 AM CDT
It's a '5-Alarm Fire' for Tax-Prep Firms
A man waits outside an H&R Block tax preparation office on April 6, 2020, in Brooklyn, New York.   (AP Photo/Mark Lennihan, File)

Members of Congress are calling for criminal charges against some of America's largest tax-prep companies for allegedly sharing tens of millions of taxpayers' legally protected data with Google and Meta. As far back as 2011, H&R Block, TaxSlayer, and TaxAct allegedly shared private information entered into its website forms—including gross income, tax refund amounts, information related to government programs used, and tax breaks claimed—through tracking pixels, which gather data about website visitors to be used in digital advertising. "Every single taxpayer who used their websites to file their taxes could have had at least some of their data shared," a new congressional report reads, per CNN Business.

The data was sent to Google and Facebook without user consent or disclosures, according to the report compiled by seven legislators led by Democratic Sen. Elizabeth Warren, the result of a seven-month investigation sparked by The Markup's reporting. Legal experts tell CNN that the findings, which offer support for a direct-to-IRS e-file system now in development, could prompt government and private lawsuits and criminal penalties that could spell the end of the tax-prep firms. "This is a five-alarm fire, if what we know about this so far is true," Georgetown University law professor David Vladeck, a former FTC consumer protection chief, tells the outlet. "On a scale from one to 10, this is a 15."

The tax-prep firms indicated they didn't fully understand "the extent to which they would send taxpayer data to these tech firms," according to the report, per the Washington Post. Yet Meta said it instructs partners not to use its tools to share sensitive information. It also said its systems are "designed to filter out potentially sensitive data it is able to detect." Still, Meta used the data—which legislators said was scrambled to protect privacy, but could easily be unscrambled—to show targeted ads to its users and to train artificial intelligence algorithms, investigators found. It's unclear if Google used the data for commercial purposes. The company said it has "strict policies against advertising to people based on sensitive information." (More tax preparer stories.)

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