Lawmakers Call for DOJ Action Against Tax Prep Firms Over Pixel Data Tracking Violations

A coalition of Democratic lawmakers is intensifying pressure on the Justice Department (DOJ) to pursue legal action against tax preparation companies accused of improperly sharing sensitive user information with major tech firms, including Meta and Google. According to a recent letter obtained by The Verge, Senators Elizabeth Warren (D-MA), Ron Wyden (D-OR), Richard Blumenthal (D-CT), and Representative Katie Porter (D-CA) are calling for accountability in the wake of alarming privacy breaches.

The controversy surrounding these tax prep companies ignited after a 2022 report by The Markup highlighted how these firms used advertising pixels to transmit taxpayer data to tech giants without proper consent. The revelations have sparked a series of investigations, including a congressional probe and a subsequent audit by the Treasury Inspector General for Tax Administration (TIGTA). The findings of this audit, released last month, echoed concerns raised by the lawmakers, further solidifying the case for DOJ intervention.

In their letter, the lawmakers noted that their investigation specifically targeted companies such as TaxSlayer, H&R Block, and Tax Act, with The Markup also identifying the presence of these tracking pixels in software provided by Ramsey Solutions. Although TIGTA did not disclose the names of the companies involved in its audit, it reported that several tax software providers failed to comply with federal regulations designed to safeguard taxpayer privacy.

Per The Verge, the audit indicated that while these companies did seek taxpayer consent for sharing tax return data—often through vague checkboxes—the requests lacked clarity regarding the purpose of data collection and the specific entities that would access this information. Furthermore, the IG’s report emphasized that existing federal guidelines for obtaining consent do not adequately address the use of tracking pixels, recommending that the IRS revise its procedures accordingly.

The lawmakers contend that it is now incumbent upon the DOJ to enforce the law. In their correspondence, they highlighted the severe penalties associated with knowingly disclosing or misusing tax return information, which could result in up to a year in prison and fines of up to $1,000 per violation. They expressed that the potential exposure of these tax preparation firms to billions of dollars in criminal liability makes it imperative for the DOJ to take decisive action.

“Accountability for these tax preparation companies — who disclosed millions of taxpayers’ tax return data — is essential for protecting the rule of law and the privacy of taxpayers,” the senators stated in their letter to the DOJ. They urged the department to align its actions with the findings of TIGTA and the IRS, emphasizing the need for justice against any companies or individuals who have breached the law.

Source: The Verge