Google and Meta obtained data from tax preparation companies, and lawmakers are calling for an investigation

Sen. Elizabeth Warren (D-MA) speaks during a Senate Banking Committee hearing on Capitol Hill on June 13, 2023 in Washington, DC. The committee held a hearing to review the Consumer Financial Protection Bureau’s Semi-Annual Report to Congress.

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A group of lawmakers led by Democratic Massachusetts Sen. Elizabeth Warren has called on the Biden administration to investigate how tax-prep software companies illegally share customer data with tech platforms Google and Meta.

In a letter to Attorney General Merrick Garland, Federal Trade Commission Chair Lena Khan, Internal Revenue Service Commissioner Daniel Werfel, and Treasury Inspector General for the Tax Administration G. Russell George, lawmakers lay out the key findings. from their probe Expansion of reporting from The Markup and The Verge, which initially disclosed data sharing. The Federal Trade Commission declined to comment on the letter, and the other agencies named did not immediately respond to a request for comment.

In a story published last year, the publication jointly reported that tax software companies TaxSlayer, H&R Block, and TaxAct had shared sensitive financial information with Meta Facebook through a piece of code known as a pixel. The report found that Meta pixel trackers sent names, emails, and income information to Meta, in violation of the platform’s policies.

The report also found that TaxAct had sent similar information to Google through its analytics tool, but that information did not include names.

After the initial report, both Meta and Google told CNBC that they have policies against customers or advertisers who send them sensitive or personally identifiable information. Some of the data that tax preparation companies provided to publications at the time seemed to indicate that the data was shared in error.

Based on the original report, the group of seven lawmakers have opened their own investigation into the extent of data sharing. Among their findings on Wednesday, the lawmakers said that millions of taxpayer information were shared with big tech companies through tax preparation software and that both the tax preparation companies and the technology companies were “reckless” in how they handled sensitive information. Although the companies said shared information would be anonymous, lawmakers found that experts believed it wouldn’t be difficult to link data to individuals.

Sen. Ron Wyden, R-D-Richard Blumenthal, D-Con. Dr. I, Tammy Duckworth, D-Illinois, Bernie Sanders, I-VT, Sheldon Whitehouse, Dr. I, and Representative Katie Porter, D-Calif., join Warren in the investigation and letter.

While tax preparation companies have installed Meta and Google tools without fully understanding the privacy implications, according to lawmakers, the two tech platforms failed to provide enough information about how they collect and use information collected through their tools. Although both Meta and Google said they had filters to catch sensitive data collected inadvertently, they appeared to be “ineffective,” the lawmakers wrote.

The investigation also found that profiling tools used by TaxAct allegedly collected more information than previously reported, including the approximate amount of federal taxes owed by the person. They said Meta confirmed that it used data collected from tax software providers to “target ads to taxpayers, including to companies other than the tax preparation companies themselves, and to train Meta’s artificial intelligence algorithms.”

The group believes their findings indicate that tax-processing companies “may have violated taxpayer privacy laws,” which could result in criminal penalties “up to $1,000 per case and up to a year in prison,” according to the letter.

After calling on agencies to investigate and prosecute where necessary, lawmakers have indicated that the new policies may mitigate the problem in the future.

“We also welcome the IRS’ recent announcement of a free, direct file trial next year, which will give taxpayers the option to file taxes without sharing their data with untrustworthy and incompetent tax preparation companies,” they wrote.

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