Income Taxes and Data Privacy

Each year in the United States, the Internal Revenue Service (IRS) processes approximately 160 million individual tax returns. Personal income taxes in America is anything but a simple process. In fact, there are literally more than 800 forms and schedules available to accommodate a wide variety of income reporting scenarios.

But with approximately 92% of all tax returns in the United States being filed electronically, just how safe is your personal data?

To kick off the episode, we cover a little news, looking at how one Washington State Department of Transportation (WSDOT) Secretary proposed mandating a GPS tracking device in all electric vehicles. The reason? He doesn't just want to tax you per mile driven, but he also wants to adjust your taxes based on where, when and why you're driving.

In this episode of Privacy Files, Rich and Sarah take a hard look at some of the problems with electronic filing and what you should be on the watch for.

Sarah begins by introducing the Internal Revenue Code called Tax Information Privacy. It prohibits the IRS, your tax professional and any other tax prep company from disclosing your tax information without your written consent.

Rich then dives into last year's bombshell story by The Markup about the Meta Pixel tracking code being used to collect sensitive financial information via some of the largest online tax-filing services. These services include H&R Block and TurboTax.

In general, data being shared with Facebook included users' income, filing status, refund amounts and dependents' college scholarship amounts.

The tax services involved in this investigation have since claimed they have either wholly removed or changed the settings of their tracking pixels to stop gathering financial information.

But data sharing is just one vulnerability. According to Accounting Today, there has been a 300% increase in cyberattacks on accounting firms since the major rise in working from home started back in 2020.

Keeping in mind that in 2022, there were nearly eight million reports of suspicious activity related to income tax filing and identity theft, Sarah closes out the episode by offering ten helpful tips for protecting your privacy when filing your taxes.

Links Referenced:

https://taxfoundation.org/publications/latest-federal-income-tax-data/

https://www.pbs.org/newshour/economy/how-to-navigate-an-unusually-complicated-tax-year-according-to-experts

https://en.wikipedia.org/wiki/IRS_tax_forms

https://themarkup.org/pixel-hunt/2022/12/02/meta-sued-for-collecting-financial-information-through-tax-filing-websites

https://www.documentcloud.org/documents/23326894-322-cv-07557-si

https://www.taxslayer.com/media-room/prdetails?articleID=122509

https://themarkup.org/pixel-hunt/2022/10/20/senator-questions-zuckerberg-about-facebooks-collection-of-sensitive-health-information

https://www.pewresearch.org/internet/2015/05/20/americans-attitudes-about-privacy-security-and-surveillance/

https://www.washingtonpolicy.org/publications/detail/wsdot-secretary-wants-mandated-gps-tracking-for-a-road-usage-charge

https://www.forbes.com/sites/forbestechcouncil/2023/03/15/how-improved-data-privacy-can-impact-the-future-of-the-gas-tax/?sh=56974e6b15ea

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