JEFFERSON CITY — At least one of the tax preparation companies being sued for allegedly sharing Missourians’ financial data has settled its case with the state.
TaxAct, based in Iowa, agreed to pay $195,000 and tighten its data-sharing capabilities in an order issued Monday.
Under the agreement, which was approved by St. Louis Circuit Judge Judge Michael Stelzer, TaxAct shall not disclose any consumer tax information without first obtaining the consent of the taxpayer.
TaxAct, which was represented in court by former Gov. Jay Nixon, was among three companies sued by Missouri in July.
The lawsuit was filed by Republican Attorney General Andrew Bailey just a day after a group of Democrats in Congress reported that the three large tax preparation firms sent “extraordinarily sensitive” information on tens of millions of taxpayers to Facebook parent company Meta over the course of at least two years.
Their report urged federal agencies to investigate and potentially go to court over the wealth of information that the companies shared with the social media giant.
The lawsuit alleges that H&R Block, TaxSlayer and TaxAct violated state consumer protection laws by sharing the information.
The allegations claimed the tax preparation firms made information available to Meta and other companies “despite explicitly promising not to share such information with third parties in their privacy policies.”
The lawsuit said the companies gave Meta access to information such as names and financial information such as savings account contributions.
That, the lawsuit said, violates Missouri’s Merchandising Practices Act, which prohibits misrepresentation, omission, deception and unfair business practices.
The state is seeking restitution for Missourians who may have had their data used. It also asks for a civil fine and a payment to the state equal to 10% of the amount recouped from restitution.
H&R Block, which is based in Kansas City, is seeking a change of venue in the case from the city court system to Jackson County and is seeking to be separated from TaxSlayer as the suit goes forward.
TaxSlayer, based in Georgia, argued in briefs filed last month that Bailey’s case is flawed and is seeking to dismiss the state’s claim for restitution.
“(T)he Attorney General does not allege that TaxSlayer profited in any way from the alleged conduct. For example, the Attorney General does not allege that Meta, Google, or anyone else paid TaxSlayer for its use of pixels or for any information collected from pixels. Nor does the Attorney General allege that TaxSlayer obtained additional customers as a result of the use of pixels,” attorneys for the company said.
In addition, company attorneys said, “There is no assertion that the alleged disclosure of information via the use of pixels impacted the quality or value of the tax preparation services received by Missouri consumers.”
A hearing on transferring the case to another circuit is scheduled for Nov. 28.
According to Money Talks News, the IRS has announced it is “taking steps” to trial a new free tax preparation and filing service next year. Despite finer details still unreleased, the pilot program would allow taxpayers to prepare and file their returns without incurring costs to do so. PennyGem’s Chloe Hurst has the story!
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