10/22/2024 | Press release | Distributed by Public on 10/22/2024 09:45
Treasury, IRS assessment confirm 2023 Congressional investigation finding that companies broke the law by sharing sensitive data with Big Tech firms.
Tax prep companies potentially face billions of dollars in criminal liability.
"DOJ has the sole authority to enforce the criminal statute on behalf of the millions of taxpayers harmed by this unauthorized disclosure of their sensitive personal and financial data."
Washington, D.C. - U.S. Senators Elizabeth Warren (D-Mass.), Ron Wyden (D-Ore.), Chair of the Senate Committee on Finance, and Richard Blumenthal (D-Conn.), along with Representative Katie Porter (D-Calif.) wrote to the Department of Justice (DOJ) urging the investigation and prosecution of major tax preparation companies for illegally sharing protected and sensitive taxpayer information with Big Tech firms.
Last month, the Treasury Inspector General for Tax Administration (TIGTA) released an audit report confirming that four online tax preparation companies broke the law by sharing legally protected and sensitive taxpayer information with Big Tech firms without taxpayer consent. Specifically, the report found that consent statements being used by the tax prep companies did not clearly identify the intended use of taxpayer data, a violation of Treasury regulations. The IRS agreed with TIGTA's assessment. The report confirms November 2022 investigative reporting by the Markup and the results of a July 2023 Congressional investigation, led by Senator Warren, which found that the improper sharing of sensitive taxpayer personal and financial information by TaxSlayer, H&R Block, TaxAct, and Ramsey Solutions with Meta and Google appeared to be illegal.
Tax prep companies used pixels, computer code that tracks a user's website activity, to obtain sensitive personal and financial information, including approximate income and refund amounts, for millions of taxpayers who filed their taxes online with these companies. Meta then used that information for advertising and to train its AI algorithm.
TIGTA conducted a detailed review of four tax preparation companies, and found that the companies did not obtain proper taxpayer consent for the release of their information.
"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 and the Internal Revenue Service," wrote the lawmakers. The penalties for these violations can include $1,000 per violation and up to 1 year in prison. TIGTA itself notes that it "reports potential criminal violations directly to the Department of Justice when TIGTA deems that it is appropriate to do so."
The IRS recently announced the expansion of the highly successful Direct File program to 24 total states, making 30 million taxpayers eligible to file for free, securely, and directly with the IRS. However, many taxpayers still rely on private tax prep companies.
"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," concluded the lawmakers.
Senator Warren has been at the forefront of holding tax prep firms and Big Tech accountable for their behavior, and pushed for an easy and free IRS Drect File program:
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