Nine individuals joined in filing a class action lawsuit in US District Court, Northern District of California against Google, LLC (Google) alleging that their sensitive financial information was involuntarily transmitted to Google while filing their taxes online. The class action members filed their taxes using tax preparation services offered by H&R Block, TaxAct and TaxSlayer.
“[Big Tax Prep had] recklessly shared tens of millions of taxpayers’ sensitive personal and financial data with Meta for years.”
Google analytics & tracking pixel
The complaint against Google alleges that it focuses on and receives over 70% of its revenue, approximately $104 billion in 2020, through advertising. A key advertising feature that Google offers is a host of business tools with advanced analytics known as Google Analytics. Google Analytics can track data and provide customers with information about how users interact with different ads and websites.
One of the tools within Google Analytics is their embedded pixel, which is a small, invisible web bug that website owners can add to their website code to measure information about how that user interacted with the page. The tracking pixel is a default feature of using Google Analytics. Once the tracking pixel collects information, it packages it and sends it to Google Analytics to be processed into reports.The tracking pixel is offered in a free version of Google Analytics, but the complaint states that this is because Google benefits and profits from the use of the tracking pixel. Allegedly, Google can amass huge amounts of data from the tracking pixel and can even decode the anonymity of the data.
H&R BLOCK, TAXACT & TAXSLAYER
In the complaint, three of the most widely used online tax preparation services are identified as having used Google's tracking pixel on their websites - H&R Block, TaxAct and TaxSlayer. The type of data that the tracking pixel would collect includes adjusted gross income, certain types of income such as rental income or capital gains, certain tax deductions, email addresses, filing status, year of return and refund amounts.
For example, TaxSlayer completed 10 million federal and state tax returns last year and had the Google Analytics tracking pixel embedded on its website beginning in 2011. TaxSlayer stated that adjusted gross income and refund amounts for users were disclosed to Google. Similarly, TaxAct used additional tracking pixels to collect information which included full name, names of dependents, email, home address, phone number and gender.
SENATE INVESTIGATION
The complaint states that "Google would have known, or at least recklessly turned a blind eye to, the fact that it was collecting vast amounts of confidential tax information." Unfortunately, however, tax preparation service companies were also complacent in the data collection, calling it a "common industry practice." The complaint alleges that H&R Block, TaxAct and TaxSlayer have been "quietly transmitting" sensitive financial information to Google for years.
In a recent Senate investigation report titled "Attacks on Tax Privacy: How the Tax Prep Industry Enabled Meta to Harvest Millions of Taxpayers' Sensitive Data", it was revealed that "Big Tax Prep" had "recklessly shared tens of millions of taxpayers' sensitive personal and financial data with Meta for years." The investigation specifically named H&R Block, TaxAct and TaxSlayer.
At the conclusion of the report, the IRS, the Treasury Inspector General for Tax Administration, the Federal Trade Commission and the Department of Justice were urged to fully investigate and prosecute any "untrustworthy and incompetent" tax preparation firms that violated the law.
PRIVACY CONCERNS
Although only H&R Block, TaxAct and TaxSlayer are identified by name in this complaint, the Senate investigation calls this an issue of "Big Tax Prep" and "untrustworthy and incompetent tax preparation." Data would not have been transmitted to Google had these tax preparation companies not knowingly utilized the Google Analytics tracking and other pixels. Your company's data is sensitive and should remain private. When you hand your data over to an online tax preparation service that may use automation or tracking tools, you lose control over where your data goes and who sees it.
At Libertas, we understand the importance of privacy and data security concerns. If you are looking to receive personal, partner-level attention on your Indirect Tax issues, Libertas is your firm.