
A contingent of legislators, led by Massachusetts Sen. Elizabeth Warren, is imploring the Biden administration to look into allegations that tax prep software providers may have unlawfully passed on taxpayer information to tech assemblies such as Meta and Google. In a letter, the legislators affirmed findings emanating from The Markup and The Verge which uncovered the data sharing in the first place. According to the officials, both the tax preparation firms and tech organizations exhibited "carelessness" in the way they handled confidential data.
A Massachusetts Democratic Sen. Elizabeth Warren-led group of lawmakers has urged the Biden administration to investigate whether tax prep software companies violated the law by illegally sharing customer data with tech platforms Google and Meta. The group's call for action is based on their own probe, which was sparked by reports from The Markup and The Verge revealing how TaxSlayer, H&R Block and TaxAct had shared sensitive financial information with Meta's Facebook through a piece of code known as a pixel. TaxAct was also found to have sent similar information to Google through its analytics tool, but without any names.
In their letter to Attorney General Merrick Garland, Federal Trade Commission Chair Lina Khan, IRS Commissioner Daniel Werfel and Treasury Inspector General for Tax Administration J. Russell George, the bipartisan group of seven lawmakers said their probe highlighted that millions of taxpayers' information had been shared with Big Tech firms through the tax prep software, and that both the tax prep companies and tech firms had been "reckless" in how they handled these sensitive data. The letters also noted that the tax prep companies seemed to have installed Meta's and Google's tools without knowing their full privacy implications; while the two tech platforms failed to provide sufficient information about how they would collect and use the information gathered through these tools.
The lawmakers mentioned in the letter that Meta's tools used by TaxAct had allegedly collected more information than previously reported, including the approximate amount of federal taxes a person owed. Moreover, Meta even confirmed it used data collected from the tax software providers for purposes such as targeting ads and training AI algorithms. This, they believe, indicates the tax prep companies may have broken the law, and in such a case, the companies could face criminal penalties of up to $1,000 per instance and up to a year in prison.
The letter also suggested policies that could prevent such data sharing in the future, such as the IRS' recently announced free, direct file pilot to give taxpayers the option to file taxes without sharing their data with tax preparation firms.
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