For years, a trio of popular tax prep sites shared the personal data of millions of Americans — including their email addresses, dependents' names and adjusted gross income — with Google and Facebook owner Meta, according to a new congressional report.
An investigation led by the offices of seven left-leaning legislators found that H&R Block, TaxSlayer and TaxAct have long been using a type of computer code called a "pixel" that collects information about users. The report alleges that these pixels (along with other tools) were able to track and transmit data to Google and Meta, the latter of which used it for targeted advertising.
"Big Tax Prep companies have recklessly shared personal and financial data of millions of taxpayers with Big Tech for years," Sen. Elizabeth Warren, D-Mass., tweeted Wednesday. "Regulators need to fully investigate and prosecute those who violated the law."
Here's what we know so far.
Why does it matter if tax prep services shared data?
The congressional report was a follow-up to a November story by The Markup about how H&R Block, TaxAct and TaxSlayer were using tracking tools that sent sensitive taxpayer data to Google and Facebook. The pixel technology itself is extremely common, but the report says the data-sharing wasn't appropriately disclosed to taxpayers, who also did not consent to it.
The tax software providers "indicated that they installed the Meta and Google tools on their websites without fully understanding the extent to which they would send taxpayer data to these tech firms," it reads.
The legislators involved in the report say that these practices have not only put taxpayer privacy at risk for years — they also may be a violation of taxpayer privacy laws.
Who was affected?
The Washington Post reports that roughly 10 million Americans use the TaxSlayer, TaxAct and H&R Block sites to do their taxes every year. It's unclear exactly how many people had their data shared by these tax prep sites, though the report estimates it's in the tens of, or possibly hundreds of, millions.
The tax preparers "ultimately indicated that — because of the way the pixels were set up and implemented — every single taxpayer who used their websites to file their taxes could have had at least some of their data shared," the report reads.
What personal information did they share?
The tools collected info that could indicate a person's filing status, income, refund amount, full name, dependents' names, email, gender, phone number, country, state, zip code, date of birth, number of W2s and more.
Drilling down further is tricky. While the pixels may have technically skirted certain sensitive details, like someone's deductions, they did transmit which buttons were clicked and tax software webpages were visited — which could then be used to reveal the underlying data. (For instance, say you opened up a page on Schedule D. The companies could then extrapolate that you had income from capital gains.)
The report also points out that though the shared data was anonymous, it's not hard to decode and link them to taxpayers' actual identities.
What happens now?
According to the congressional report, all three of the tax preparers disabled or removed the pixels after the publication of The Markup's story last year.
In a statement on Wednesday, H&R Block told Money that it "takes protecting our clients’ privacy very seriously, and we have taken steps to prevent the sharing of information via pixels."
TaxAct noted that it engaged with the staffers who worked on the report to "provide transparent, detailed explanations on our use of these standard analytics tools."
"TaxAct has always complied with laws that protect our customers’ privacy and, as noted in the report, we disabled the tools in question while we evaluated potential concerns," it added. "Protecting the rights and privacy of our customers is our top priority, and we are committed to engaging with stakeholders to address any concerns and to help advance public policy."
Money has emailed TaxSlayer requesting further details.
Meanwhile, the legislators behind the report are demanding the Department of Justice fully investigate — and potentially prosecute — the firms involved.
They're also using this as another way to push for a free direct tax filing system developed by the IRS. The agency is set to roll out a Direct File pilot program next year, which the report says "will give taxpayers the option to file taxes without sharing their data with untrustworthy and incompetent tax preparation firms."
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