What Tax Practitioners Need to Know about IRS' Use of Big Data Analytics?

With the budget reductions and losses in staff over the past several years, the IRS has been forced to do more with less. Therefore, the IRS has turned to big data analytics to make up for its loss of personnel and the impact of the budget reductions.

Analytics entails the obvious benefit of efficiencies in mass data collection and the potential to locate tax evaders.

For more on Date Mining see our August 3, 2017 post IRS CI Forming 2 New International Criminal Units Driven By Data Mining! where we discussed that the use of data-mining technology is widespread and that the IRS Criminal Investigation unit which announced on August 2, 2017 that it is launching two groups that would centralize the unit’s national and international workloads and rely on data analysis to prioritize cases.

The IRS has indicated that it will continue to invest in data technologies to identify tax return errors and address issues with taxpayers as early as possible.

The IRS Has Indicated That It Will Continue to Invest in

Data Technologies to Identify Tax Return Errors and

Address Issues with Taxpayers As Early As Possible.

 

Knowing that the IRS is using public Internet data from websites such as Facebook, taxpayers should consider that their posts could impact their probability of audit. Posting family pictures at a resort's pool when the taxpayer is claiming a business trip deduction may provide unintended results. Embellishing online profiles and posting pictures of new purchases should be avoided. Less is the best strategy.

In addition, casual sales on eBay or Amazon are becoming quite commonplace and many taxpayers do not realize that these transactions should be reviewed for potential income tax consequences.

With the IRS obtaining credit, debit, and PayPal records, matching the transactions to taxpayers or small businesses is easy. If being audited, this is something that should not be discussed online.

Taxpayers Need to Be Very Cognizant of Their

Online Profile in the Age of Big Data Analytics.

 Contact the Tax Lawyers at 
Marini& Associates, P.A. 

 

 

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