Tags: IRS | tax | dodge | technology

IRS: You Can Change Your Password and ID, But You Can't Hide

Monday, 06 May 2013 08:04 AM

By John Morgan

  Comment  |
   Contact  |
  Print  
|  A   A  
  Copy Shortlink
The Internal Revenue Service is setting up more high-tech solutions such as "robo-audits" to nail tax evaders, but so far many of the largest cheaters appear to be staying a step ahead of the government.

The IRS' data-mining tools help the agency collect only a fraction of the estimated $400 billion in annual tax dodges, according to U.S. News & World Report.

But that may be about to change. The IRS spent about $1 billion in its recent modernization.

Editor's Note:
Make 2013 the Year You Pay Zero Taxes

As a result, the agency's is rolling out an effort — developed mostly by IBM — to deploy sophisticated data-matching and pattern-recognition technology, and match up taxpayer returns with third-party information, according to U.S. Treasury Inspector General for Tax Administration J. Russell George.

With the new tools, the IRS will be able to track credit card transaction, social media, e-commerce sites including eBay, and data from mobile devices, according to U.S. News.

The IRS has revealed little to the public about the new technology-based collection strategy.

"Are they being too secretive? Probably," Joel Slemrod, a University of Michigan economics professor who follows the impact of government policy on consumer behavior, told U.S. News. "They can't tell the public everything they do, but I don't know why they are being as secretive as they are."

The agency has in the past had success pursuing small-fry tax dodgers, in part because the errors are less complex, but that is it far more expensive to go after high-income tax cheats.

"A questionable $5 million investment in a euro debt swap involving unlisted derivatives and having no clear economic purpose beyond tax avoidance, even if it is detected, might require a trip to a Liechtenstein bank to meet with a team of lawyers and accountants," U.S. News stated.

"Often, this kind of tax action amounts to a multimillion-dollar bet of the IRS's thin resources with low odds of paying off."

U.S News predicted more Americans would soon be potential targets of IRS robo-audits and personal data mining, although they may be unaware what personal data is being used.

Legal and privacy experts, as well as the IRS National Taxpayer Advocate, are urging the agency to share more details. However, the IRS has told Congress such disclosures might harm its detection efforts.

The United States has taken aim at tax-dodging individuals and the banks that help them. Congress has passed the Foreign Account Tax Compliance Act (FATCA), which forces foreign financial firms to disclose information about their American clients' accounts to the IRS. The law is set to take affect at the end of this year.

The IRS is pursuing bank records for U.S. taxpayers suspected of hiding accounts at a Caribbean lender FirstCaribbean International Bank, The Wall Street Journal reported.

The newspaper said the effort is evidence U.S. tax agents are targeting hidden offshore accounts in countries other than Switzerland, which had been a primary target to date.

Editor's Note: Make 2013 the Year You Pay Zero Taxes

© 2014 Moneynews. All rights reserved.

  Comment  |
   Contact  |
  Print  
  Copy Shortlink

 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Follow Newsmax
Facebook
Google Plus
You May Also Like

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved