Democrats urge Biden administration to investigate data practices of tax prep companies

Several Democratic lawmakers are calling on the Biden administration to investigate the data practices of major tax preparation companies after a recent report found that TurboTax repeatedly pressed filers to share sensitive tax data.

Sens. Elizabeth Warren (D-Mass.), Ron Wyden (D-Ore.), Richard Blumenthal (D-Conn.), Sheldon Whitehouse (D-R.I.) and Rep. Katie Porter (D-Calif.) pointed to a Washington Post report from March highlighting how taxpayers can avoid TurboTax’s numerous efforts to get them to share their data.

“TurboTax’s aggressive and potentially misleading tactics to get taxpayers to sign away their privacy and force them to pay for unnecessary services should be scrutinized,” the lawmakers wrote in a letter to several administration officials Tuesday.

Congressional staff found that the TurboTax software “asked to track and use taxpayer data a total of 10 times during filing,” according to the letter.

The repeated efforts by TurboTax to gain access to taxpayer data comes in the wake of an investigation by lawmakers last year that found that tax preparation companies were sharing millions of taxpayers’ data with Meta, Google and other large tech firms.

Specifically, TaxAct, TaxSlayer, and H&R Block were found to have shared “extraordinarily sensitive personal and financial information” with Meta, the letter noted.

“These predatory practices and shocking breaches of taxpayer trust only make the recent success of the IRS Direct File pilot – the first free, public, electronic federal tax filing tool in U.S. history – even more notable,” the lawmakers wrote.

“As the IRS begins to prepare for the tax filing season in 2025, we urge you to investigate usage and disclosures by major tax preparation companies of legally protected and sensitive taxpayer information, and to prosecute any company or individuals who have violated the law,” they added.