US Lawmakers Questions Tax Preparation Companies About How They Share Taxpayer Data with Big Tech Platforms

A group of US lawmakers is seeking information from tax preparation companies, such as TaxAct and H&R Block, regarding their potential ongoing transfer of sensitive taxpayer data to tech platforms like Meta for advertising purposes. This request comes after federal regulators warned of potential penalties for this practice.

US Lawmakers Questions Tax Preparation Companies
US Lawmakers Questions Tax Preparation Companies

Lawmakers sent letters to five major tax preparation companies on Wednesday, insisting on information about whether these companies have taken the Federal Trade Commission’s warning in September seriously. The warning stated that the companies could potentially face billions of dollars in fines if they had indeed breached their customers’ privacy.

US Lawmakers Questions Tax Preparation Companies About How They Share Taxpayer Data with Big Tech Platforms

The letters, which were obtained, expressed the idea that Americans should have the confidence to file their taxes without worrying about their sensitive data being shared with big tech companies.

The letters, spearheaded by Massachusetts Democratic Sen. Elizabeth Warren, address the utilization of tracking technology created by tech platforms and incorporated into the websites of tax preparation companies. This technology reportedly covertly transmitted users’ personal information to Meta and Google, purportedly without their consent.

The information gathered consisted of fundamental personal information like names and email addresses. Additionally, it included highly detailed data regarding users’ incomes, filing statuses, and refund amounts, as revealed by the findings of a congressional investigation that Warren announced in July after months of scrutiny.

The investigation discovered that, in certain instances, the tracking technology also observed the buttons and text fields users clicked on while filling out their taxes, potentially revealing the tax breaks they claimed or the government programs they use. The probe started in late 2022 following an initial report from the investigative journalism website The Markup, which exposed this practice

According to the investigation’s final report, Meta informed investigators that it used the taxpayer data it received to target third-party ads to its platform’s users and to train its artificial intelligence algorithms. In July, a spokesperson from Meta stated that the company instructs its partners not to utilize its tools for sharing sensitive information and that Meta’s systems are “designed to filter out potentially sensitive data that they can detect.”

Key Developments in Privacy and Data Use Compliance

In July, it implemented restrictions for business customers, preventing them from uploading sensitive data to its platform that could be linked to an individual, and it has policies against advertising to individuals based on sensitive information.

Trackers such as Meta’s and Google’s are widely used on the internet, but in this case, they allegedly resulted in sensitive financial data being used for non-financial reasons without consent, which could be a violation of US consumer protection laws.

In September, the FTC cautioned five companies about the potential legal consequences of using “tracking pixels” from companies like Meta. These companies included H&R Block, TurboTax maker Intuit, TaxAct, TaxSlayer, and Ramsey Solutions. The congressional letters sent on Wednesday were addressed to the same companies.

The FTC informed the recipients that they could face civil penalties of up to $50,120 per violation if they misuse personal data, deviating from the original purpose for which the data was collected, as stated by the agency at the time.

Among these five tax preparation companies, Intuit did not receive as much focus in the initial congressional probe because it didn’t utilize tracking pixels to the same extent as the others, according to the investigation.

They posed the same question to each of the four other tax preparation companies and asked for a commitment to follow the FTC’s warning not to utilize customer data in ways that consumers haven’t explicitly authorized. The lawmakers have asked the tax preparation firms to provide their responses by November 8.

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