May 22, 2024

Warren, Wyden, Blumenthal, Whitehouse, Porter Highlight New Findings on TurboTax’s Abuse of Taxpayer Data, Call on FTC, IRS, DOJ to Crack Down on Tax Prep Giants’ Ongoing Violations of Taxpayer Privacy

“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.”

“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.”

Text of Letter (pdf) 

Washington, D.C. - United States Senator Elizabeth Warren (D-Mass.), a member of the Senate Committee on Finance, Senator Ron Wyden (D-Ore.) Chair of the Senate Committee on Finance, Senator Richard Blumenthal (D-Conn.), Senator Sheldon Whitehouse (D-R.I.) and Representative Katie Porter (D-Calif.) sent a letter to Internal Revenue Service (IRS) Commissioner Daniel Werfel, Federal Trade Commission (FTC) Chair Lina Khan, Acting Treasury Inspector General for Tax Administration Heather M. Hill and Attorney General Merrick Garland calling on them to investigate use and disclosures of legally protected and sensitive taxpayer information by tax prep companies. The letter follows up on findings of the lawmakers’ July 2023 investigation that found that H&R Block, TaxAct, and TaxSlayer had illegally shared the data of millions of taxpayers with Meta, and it highlights new findings about aggressive data monetization by TurboTax, which asked to track and use taxpayer data a total of 10 times during filing. 

“With this year’s tax filing season closed, and preparation already beginning for next year, we write to urge you to investigate use and disclosures of legally protected and sensitive taxpayer information by major tax preparation companies. You should identify and prosecute any company or individuals that have violated the law,” the lawmakers wrote.

In July 2023, Senators Warren, Wyden, Whitehouse, and Rep. Porter - along with Senators Tammy Duckworth and Bernie Sanders - wrote to the agencies to inform them of the results of their investigation revealing outrageous and potentially illegal sharing of taxpayers’ sensitive personal and financial information with Meta by online tax preparation companies TaxSlayer, H&R Block, and TaxAct. In September 2023, the Federal Trade Commission (FTC) issued warnings to the tax prep companies about the civil penalties they could face if they continued to misuse confidential taxpayer data. 

Despite warnings from the FTC, tax prep companies continued sharing sensitive data this year, using different tactics. According to the Washington Post, TurboTax repeatedly asks taxpayers for permission to turn over their sensitive tax data – which the company then monetizes. Senator Warren’s office also investigated TurboTax’s monetization of taxpayers and found that “Intuit continues to try to trick and trap TurboTax users into paying junk fees to file even very simple tax returns” and that the software asked to track and use taxpayer data a total of 10 times during filing. 

“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. 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,” continued the lawmakers.

Senator Warren has fought for years for a free E-File program to make tax filing simpler and more affordable for millions of Americans: 

  • Last week, Senator Warren, Tom Carper (D-Del.), U.S Representatives Don Beyer (D-Va.), Katie Porter, and Brad Sherman (D-Calif.) led over 130 lawmakers - including Senate Majority Leader Chuck Schumer (D-N.Y.), Senate Finance Committee Chair Ron Wyden, Senate Appropriations Committee Chair Patty Murray (D-Wash.), Senate Financial Services and General Government Appropriations Subcommittee Chair Chris Van Hollen (D-Md.), and House Appropriations Committee Ranking Member DeLauro (D-N.Y,) - in sending a letter to U.S. Secretary of the Treasury Janet Yellen and IRS Commissioner Daniel Werfel, applauding the successful pilot of the Direct File program, and urging them to make it permanent and expand its functionality and scope.
  • In March 2024, Senator Warren celebrated the launch of the IRS Direct File pilot program.
  • In October 2023, Senators Warren, Ron Wyden, Blumenthal, Tammy Duckworth (D-Ill.), Bernie Sanders (I-Vt.), Sheldon Whitehouse, and Representative Porter sent letters to five tax preparation companies—H&R Block, TaxAct, TaxSlayer, Ramsey Solutions, and Intuit—that recently received notices of penalty offenses from the FTC regarding the misuse of taxpayer’s sensitive and confidential information.
  • In July 2023, Senators Warren, Ron Wyden, Richard Blumenthal (D-Conn.), Tammy Duckworth, Bernie Sanders, and Sheldon Whitehouse alongside Representative Katie Porter, released a report revealing the outrageous, extensive, and potentially illegal sharing of taxpayers’ sensitive personal and financial information with Meta by online tax preparation companies. The lawmakers also sent a letter to the IRS, the Treasury Inspector General for Tax Administration, the Federal Trade Commission, and the Department of Justice highlighting their key findings and calling on these departments to fully investigate this matter and prosecute any company or individuals who violated the law.
  • In June 2023, Senators Warren and Tom Carper, alongside Representatives Brad Sherman, Katie Porter and Don Beyer led a coalition of 99 Democratic lawmakers in a letter to IRS Commissioner Daniel Werfel and Deputy Treasury Secretary Adewale Adeyemo, applauding the IRS’s announcement of a pilot of a free tax filing tool next year.
  • In April 2023, Senators Warren and Tom Carper  led 29 other senators in a letter to the IRS Commissioner, urging the agency to simplify the tax process and broaden access to free e-filing options.
  • In December 2022, Senators Warren and Ron Wyden and Representatives Katie Porter and Brad Sherman sent letters to tax preparation companies H&R Block, TaxAct, and TaxSlayer, plus big tech firms Meta, and Google, amid reports that the tax preparation companies have been secretly transmitting individual taxpayers’ sensitive financial information to Meta and Google
  • In August 2022, Senator Warren highlighted key priorities she secured in the Senate’s Inflation Reduction Act, including establishing an IRS task force to look into developing and running an IRS-run free direct E-File tax return system, based on Senator Warren’s Tax Filing Simplification Act. 
  • In July 2022, Senator Warren led 22 lawmakers to introduce the Tax Filing Simplification Act of 2022, legislation that would direct the IRS to develop its own free online tax preparation and filing service that would simplify the tax filing process for millions of Americans 
  • In June 2022, at a hearing of the Senate Finance Committee, Secretary of Treasury Janet Yellen agreed with Senator Warren on the need to create a free tax filing system that actually works for Americans. 

###