Inland Revenue (IR) says it has paused sharing people's personal data with social media giants.
RNZ revealed last week Inland Revenue shares the details of up to half-a-million taxpayers with Facebook, Google, and LinkedIn, several times a month for targeted advertising campaigns.
The department is reviewing the practice after warnings that its hashing method does not protect personal data.
"Inland Revenue has received a number of complaints since the story first ran," it said on Tuesday.
"Our review into the use of hashing is ongoing and as part of that IR has paused the creation and uploading of new custom audience lists."
This puts a block on its ability to run social media ad campaigns.
It was also now working with the Privacy Commissioner's Office which "has contacted IR for information so it can assess if the practice of using hashing technology to de-identify information raises issues under the Privacy Act".