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The Internal Revenue Service was not wholly unaffected by budget cuts and the federal sequester, and saw many of its financial resources diminished as a result. In response, the IRS may lean on technology solutions to detect tax law violations and penalize criminals. However, the agency’s use of new data mining innovations has raised a number of privacy concerns and inquiries among consumers, legal professionals and tax preparers.
According to U.S. News and World Report, the IRS is relying more heavily on robo-audits and data mining to match returns and detect potential cases of tax evasion, fraud and inconsistencies. While the technology has been used in the past to catch low- to middle-income Americans who commit tax violations, the agency is expected to make technological advancements that allow it to focus on small businesses owners. For example, the technology now allows the IRS to track credit card transactions and gather other information from online transactions and social media postings.
At the heart of the issue is which types of third-party data the IRS will use and how this information will be assessed when trying to detect and prosecute tax evaders, the news source reports. Currently, the agency has only said that the systems allow it to gather data on every single taxpayer, including shopping records, travel, social communications and non-public information, such as health records, according to U.S. News and World Report.
“This capability is designed to feed into a single, consolidated taxpayer-account database that will support the deployment of the next generation of taxpayer service and enforcement functions,” said U.S. Treasury Inspector General for Tax Administration J. Russell George, the news source reports.
While many tax law attorneys and preparers have requested more guidance on this topic from the IRS, the agency noted that these disclosures may hinder its detection efforts.
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IRS 'Robo-Audits' & Privacy Concerns
Author: Scarinci Hollenbeck, LLC
The Internal Revenue Service was not wholly unaffected by budget cuts and the federal sequester, and saw many of its financial resources diminished as a result. In response, the IRS may lean on technology solutions to detect tax law violations and penalize criminals. However, the agency’s use of new data mining innovations has raised a number of privacy concerns and inquiries among consumers, legal professionals and tax preparers.
According to U.S. News and World Report, the IRS is relying more heavily on robo-audits and data mining to match returns and detect potential cases of tax evasion, fraud and inconsistencies. While the technology has been used in the past to catch low- to middle-income Americans who commit tax violations, the agency is expected to make technological advancements that allow it to focus on small businesses owners. For example, the technology now allows the IRS to track credit card transactions and gather other information from online transactions and social media postings.
At the heart of the issue is which types of third-party data the IRS will use and how this information will be assessed when trying to detect and prosecute tax evaders, the news source reports. Currently, the agency has only said that the systems allow it to gather data on every single taxpayer, including shopping records, travel, social communications and non-public information, such as health records, according to U.S. News and World Report.
“This capability is designed to feed into a single, consolidated taxpayer-account database that will support the deployment of the next generation of taxpayer service and enforcement functions,” said U.S. Treasury Inspector General for Tax Administration J. Russell George, the news source reports.
While many tax law attorneys and preparers have requested more guidance on this topic from the IRS, the agency noted that these disclosures may hinder its detection efforts.