Senate Dems say 'massive' taxpayer privacy breach needs DOJ probe

A group of Democratic senators wants the Justice Department to investigate several tax prep companies after an investigation the lawmakers launched concluded the companies shared reams of taxpayers’ personal and financial information with Meta.

Sens. Elizabeth Warren (Mass.), Finance Committee Chair Ron Wyden (D-Ore.) and others accuse H&R Block, TaxSlayer and TaxAct of having embedded code in their Web sites known as “pixels” that allowed their users’ sensitive tax data to be shared with Meta — the parent company of Facebook —and Google.

The lawmakers call it a “shocking breach of taxpayer privacy by tax prep companies and by Big Tech firms that appeared to violate taxpayers’ rights and have violated taxpayer privacy law.”

The sensitive data included information like federal taxes owed, filing status and names of dependents. Meta told the lawmakers it used the data from tax preparation services for targeted ads, as well as to train its own AI algorithm.

The lawmakers’ investigation piggybacks on a report published in November 2022 by the tech news outlet The Markup that first put a spotlight on the issue. The companies have said they’ve since stopped the tracking software.

The charges come as Democrats battle the tax prep industry over an IRS plan to set up a pilot program next year that would allow some people to bypass the companies and file their returns online for free directly with the agency.

“H&R Block takes protecting our clients’ privacy very seriously, and we have taken steps to prevent the sharing of information via pixels,” a spokeswoman said.

In addition to the Justice Department, Warren and her colleagues called on the IRS, the agency's inspector general, and the Federal Trade Commission to investigate the matter "and prosecute any company or individuals who violated the law."

"Under the law, 'a tax return preparer may not disclose or use a taxpayer's tax return information prior to obtaining a written consent from the taxpayer,' — and they failed to do so when it came to the information that was turned over to Meta and Google," the report said.

Alfred Ng contributed to this report. This reporting first appeared in POLITICO Pro's Morning Tax newsletter.