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News

Lawmakers Ask DOJ to Take Action Against Major Tax Preparers for Illegal Sharing of Data

By:
Karen Sibayan
Published Date:
Nov 4, 2024

article3_tax

Thomson Reuters reported that Democrat lawmakers have called for the Department of Justice (DOJ) to look into the data privacy practices of four tax preparation firms. The lawmakers said that these companies—TaxSlayer, H&R Block, TaxAct and Ramsey Solutions—are sharing protected and sensitive taxpayer information before obtaining proper consent. 

“We write to urge you to investigate and prosecute the criminal behavior of major tax preparation companies identified in our investigation and confirmed by the Treasury Inspector General for Tax Administration (TIGTA) and the IRS,” wrote Senators Elizabeth Warren (D-MA), Ron Wyden (D-OR) and Richard Blumenthal (D-CT) and Representative Katie Porter (D-CA) in an Oct.18 letter addressed to the DOJ.  

The four lawmakers cited a  Treasury Inspector General for Tax Administration (TIGTA) audit report released Sept. 17, finding that the companies' consent procedures were inadequate. The letter also mentioned The Markup's Nov. 2022 reporting and a July 2023 congressional investigative report showing improper sharing of taxpayers’ sensitive personal and financial information by the four tax preparers with Meta and Google. 

According to Thomson Reuters, the letter is the latest in a slew of moves by Democrats to go against what they characterized as improper sharing of sensitive taxpayer data with tech companies done through “pixels” on the four companies' websites utilized to track visitor activity. According to lawmakers, Meta utilizes the activity data to advertise and train artificial intelligence algorithms. 

The 2023 report also found privacy issues with the Google Analytics pixel tool. The lawmakers said that the companies are violating a regulation that disallows a tax return preparer to disclose or utilize taxpayers' tax return information without obtaining their written consent. 

Meanwhile, TIGTA’s audit report examined four unnamed tax software companies. The report surmised that although the companies obtained taxpayer consent, “the consent statements did not clearly identify the intended purpose of the disclosure and the specific recipient(s) of the tax return information.”  

The agency added that the taxpayers would have to review the tax preparers’ privacy and user agreements and taxpayer consent statements to know what they are saying yes to. However, those documents are “scattered.” Given how things are, taxpayers might have a hard time comprehending what they are “allowing the software company to do with their personal tax information,” TIGTA said. 

The lawmakers said in the letter that the tax prep companies have "disclosed millions of taxpayers’ tax return data, meaning they could potentially face billions of dollars in criminal liability—is essential for protecting the rule of law and the privacy of taxpayers." Further, they said that these tax preparers should be held accountable "for illegally sharing sensitive taxpayer information," Finally, they urged the DOJ to follow the facts and the conclusions of TIGTA and the IRS and to take appropriate action against any firms or individuals that have violated the law.