Legal experts and taxpayer advocates have raised concerns over the Internal Revenue Service’s plan to begin using “robo-audits” to identify citizens who have failed to properly pay their federal income tax, saying the agency reached the decision to roll out the new practice without properly publicizing or discussing it.
The IRS initiates tax audits on Texas taxpayers believed to have filed inaccurate tax returns. In some instances, the IRS might accuse someone of willfully and knowingly cheating on his or her return. Those accused of this offense face harsh sentences, including an audit fraud case and potential jail time. In other cases, the IRS determines that a taxpayer made accidental mistakes on his or her return and charges the taxpayer based on the corrected return.
The IRS has reportedly begun to track digital activity in much the same way as Internet cookies, trailing taxpayers’ online and linking their activity to credit card bills, Social Security numbers and personal health data. The tax agency can then match a user’s electronic payments or emailing patterns to their tax return to look for discrepancies. The private industry experts hired by the IRS to track taxpayers will even assess and record taxpayers’ posts and behavior on social media sites like Facebook and Twitter to see if any information listed their conflicts with their returns.
The IRS plans to make use of a number of other impressive technologies, most of them focused on pulling huge amounts of data from taxpayers’ online services and websites and analyzing it using a large parallel computing system. These technologies include agent-based and statistical modeling, automatically sorting data into thousands of subgroups based on as many as one million unique parameters and neural networks capable of machine learning.
One law professor said he is troubled by the new technology, saying that the U.S. has no laws sufficient for dealing with the IRS’s increased ability to “see into people’s lives.” He added that taxpayers should pay close attention to how the agency uses its advanced new tools in the coming months.
Source: Business Insider, “The IRS Has More Data About You Than Ever Before” Richard Satran, May. 13, 2013