IRS Trolling Social Media Looking For Tax Evaders

Thanks to Big Data analysis and digital information-gathering tactics, the IRS employs a more watchful eye than ever especially with the fiscal challenges faced by the Federal government, the pressure for the IRS to recover lost revenue has never been higher. Conveniently enough, the IRS has made massive investments in its computing power and tools for crunching big data, allowing for more automation and rapid analysis. That means a greater capacity for robo-audits and less room for honest mistakes.

The IRS is reportedly using data from social media on people who file fishy-seeming taxes or don’t file at all. The IRS loses roughly $300 billion per year to tax evasion; and in times of budget cuts, with a smaller staff, the agency has allegedly turned to both data mining and data crunching.

In its quest to find and audit tax dodgers, the IRS is said to use online activity trackers to sift through the mass amounts of data available on the Internet. This data is then added to the information the agency already has on people, such as Social Security numbers, health records, banking statements and property rolls.

But the IRS efficiency in catching tax evaders is not just from an improvement in the tools it uses but also from the fact that the data itself is richer and more varied than ever, drawing increasingly from whatever details about our digital lives the IRS can get its hands on, including information that isn’t publicly accessible.

In an April 2013 U.S. Senate Hearing, Senator Chuck Grassley (Iowa, Republican) asked Steven Miller, the IRS’ then acting commissioner, whether the IRS obtained a search warrant before reading private Facebook or Twitter messages. The Senator didn’t get an answer.

We don’t know the full extent of the IRS’s data-mining capabilities, but recent reporting has revealed new details. 

1. Analyzing Your Social Media Updates 

The social Web has been a boon for IRS investigators, who can use updates from Facebook, Twitter and other services to bolster its cases against alleged tax cheats. Information about work history, one’s physical whereabouts and even purchases can be gleaned from social networks. Some of it, like tweets and certain details from Facebook, are public. But should the IRS want to take a closer look, it supposedly has the means to do so, with or without a warrant. 

According to recent reports, the IRS cross-references data from social networks with Social Security numbers and then works in a host of other private data to look for suspicious patterns. 

the IRS is using online activity trackers to mine through massive amounts of data on sites like Facebook, Instagram and Twitter to look at photos and other updates that might offer a glimpse into vacations, home and car purchases and other goodies.

Facebook, Instagram, and Twitter have all become places where people post intimate details about their lives: vacation photos, work successes, buying a new house, car, or other cool stuff.

However, this information is also up for grabs by the Internal Revenue Service. So a word of advice: THINK BEFORE YOU POST. After all, do you really want IRS to like your Facebook update or be your newest Twitter follower?

2. Monitoring Digital Payments and Credit Card Activity 

The rise of commerce and digital payments has also given the IRS new sets of data to mine and analyze. The agency has long looked at taxpayers’ activity on ecommerce sites like EBay, but are now going deeper and getting a look at credit card transactions and other online payments. 

The IRS looks for potential auditing targets by matching tax filings to social media or electronic payments. The exact mechanism of this monitoring isn’t publicly known (lest they tip off tax cheats) but it is widely believed that it includes examining credit card transactions for the first time ever. And if the IRS feels it has cause to take a peek at your online payment data, it won’t have a problem doing so. 

3. Peeking At Your Email Usage 

While as of April 2013 the IRS said it would abandon its controversial policy that claimed the right to read taxpayers’ e-mail without first obtaining a search warrant, the IRS did not make the same commitment for other private electronic communications including when and how the IRS looks at email usage.

The IRS’ big data analysis tools are used in part for “tracking individual Internet addresses and emailing patterns.” That’s pretty vague. In theory, the IRS could glean some details about email usage simply by looking at browsing activity, whether that insight comes from an ISP or email service provider. 

Does that mean that the IRS has blanket access to everybody’s Gmail account for the purpose of feeding its data-crunching behemoth? That seems pretty unlikely. Instead, what the IRS likely does is to get a search warrant to access individual accounts for people who are already suspected of wrongdoing. It usually is easy for the IRS to be granted a search warrant and the taxpayer is not required not receives any notice that a search warrant was issued.

Conclusion

Of course, these days everyone from Google to Nike is cobbling our data together to create profiles of us.

Still, it’s different when the IRS does it. If Nike is analyzing your information, the worst consequence is that they market stuff to you that you don’t want and it’s annoying. However, if the IRS does it, the worst consequence is there could be legal ramifications, whether it’s fines, penalties or imprisonment. Which is why the sooner you hire tax counsel experienced in criminal tax matters, the higher the chance that further escalation of your case in the criminal arena could be avoided or limited.

Protect yourself from excessive fines and possible jail time. Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Francisco, San Diego and elsewhere in California defend you from the IRS.

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