Tax Law: IRS Will Scour Social Media To Catch Tax Evaders

Picture of glasses on IRS form to accompany article about IRS tool to use social media to catch tax cheatsIf you’ve failed to report side business income on your tax returns, it’s time to review your social media marketing presence. Why? The IRS plans to mine Facebook, Instagram, and Twitter in search of tax cheats.

IRS: Dear Techies, Help Us Nail Tax Cheats

Last month, the IRS published a request for information (RFI) for a social media mining and reporting tool that will help the agency gather evidence against suspected tax cheats. Since “businesses and individuals increasingly use social media to advertise, promote, and sell products and services,” the agency thinks it will be a useful evidentiary resource.

The IRS’ RFI demands that the solution:

  1. Output a product that is “easily explainable in court.”
  2. Includes a robust statistics reporting mechanism that collects advertiser-published information about new products, current sales, and new locations.
  3.  Includes a reporting mechanism that picks up when taxpayers participate in “online chat room[s], blog, or forum, and reports showing the chat room or blog conversation threads.”
  4. Allows for biometric data (i.e., photos, address, and changes to marital status) research.
  5. Allows for 25,000 concurrent users.

Submissions must be in by January 8, 2019.

Practice Confirmation and a Push towards IRS Tech Solutions

It’s long been suspected that the IRS uses social media to mine for alleged “tax cheats,” but this is the first time it’s been confirmed by the agency.

The request comes at a critical time for the IRS. Tax revenues are on the decline, and analysts estimate that American businesses underpay taxes by the hundreds of billions. So while deficits are rising, tax revenue is on the decline, and the agency is in search of solutions.

Moreover, the IRS’ budget keeps getting slashed, and dwindling staffers are forced to work with fewer resources. Analysts also suspect that the agency will see a mass retirement wave over the next two years, which will create additional strain.

As such, the agency is on the hunt for automated, digital solutions that can make up for the dearth of human resources.

IRS Says It Won’t be a Hunting Tool

The IRS insists it won’t be using the new tool to seek out potential tax evaders. Instead, it promises to use the data to finalize extant cases. Moreover, the agency vowed to respect “taxpayer rights” and “be mindful that frequently information posted on social media and the internet may be wrong or misleading.”

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