IRS to use frequent flyer & credit card data to do audits?
May 1, 2013, 1:40 pm
#1
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IRS to use frequent flyer & credit card data to do audits?
According to the following article
http://news.yahoo.com/irs-data-snare...171310646.html
it seems the billion dollar plus IRS "modernization" effort is there to enable auditing of US taxpayers using third party data, including credit card and travel records.
It sounds like mileage running and/or the credit card sign up bonus/churning game using "manufactured spend" may end up actually creating additional hassles for US taxpayers.
"Real time" audits of electronic tax returns. The IRS's next phase in high-tech tax collection will be to create a "real-time" check of tax returns to "match them to third party information," said U.S. Treasury Inspector General for Tax Administration J. Russell George in testimony before Congress. Starting this year, the IRS tools will be able to track all credit card transactions, for starters. The agency has also instructed agents on using online sources such as social media and e-commerce sites including eBay, as well as the rich data generated by mobile devices. In one controversial disclosure in April, the ACLU showed documents in which the IRS general counsel said the agency could look at emails without warrants, but the IRS has said it will not use this power.
While the agency has declined to give details about what third-party personal data it will use in robo-audits and data mining, it has told government and industry groups that its computers are capable of scanning multiple networks at the same time to collect "matching" comprehensive profiles for every taxpayer in America. Such profiles will likely include shopping records, travel, social interactions and information not available to the public, such as health records and files from other government investigators, according to IRS documents.
While the agency has declined to give details about what third-party personal data it will use in robo-audits and data mining, it has told government and industry groups that its computers are capable of scanning multiple networks at the same time to collect "matching" comprehensive profiles for every taxpayer in America. Such profiles will likely include shopping records, travel, social interactions and information not available to the public, such as health records and files from other government investigators, according to IRS documents.
it seems the billion dollar plus IRS "modernization" effort is there to enable auditing of US taxpayers using third party data, including credit card and travel records.
It sounds like mileage running and/or the credit card sign up bonus/churning game using "manufactured spend" may end up actually creating additional hassles for US taxpayers.
May 1, 2013, 8:35 pm
#3
Join Date: Apr 2012
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According to the following article
http://news.yahoo.com/irs-data-snare...171310646.html
it seems the billion dollar plus IRS "modernization" effort is there to enable auditing of US taxpayers using third party data, including credit card and travel records.
It sounds like mileage running and/or the credit card sign up bonus/churning game using "manufactured spend" may end up actually creating additional hassles for US taxpayers.
"Real time" audits of electronic tax returns. The IRS's next phase in high-tech tax collection will be to create a "real-time" check of tax returns to "match them to third party information," said U.S. Treasury Inspector General for Tax Administration J. Russell George in testimony before Congress. Starting this year, the IRS tools will be able to track all credit card transactions, for starters. The agency has also instructed agents on using online sources such as social media and e-commerce sites including eBay, as well as the rich data generated by mobile devices. In one controversial disclosure in April, the ACLU showed documents in which the IRS general counsel said the agency could look at emails without warrants, but the IRS has said it will not use this power.
While the agency has declined to give details about what third-party personal data it will use in robo-audits and data mining, it has told government and industry groups that its computers are capable of scanning multiple networks at the same time to collect "matching" comprehensive profiles for every taxpayer in America. Such profiles will likely include shopping records, travel, social interactions and information not available to the public, such as health records and files from other government investigators, according to IRS documents.
While the agency has declined to give details about what third-party personal data it will use in robo-audits and data mining, it has told government and industry groups that its computers are capable of scanning multiple networks at the same time to collect "matching" comprehensive profiles for every taxpayer in America. Such profiles will likely include shopping records, travel, social interactions and information not available to the public, such as health records and files from other government investigators, according to IRS documents.
it seems the billion dollar plus IRS "modernization" effort is there to enable auditing of US taxpayers using third party data, including credit card and travel records.
It sounds like mileage running and/or the credit card sign up bonus/churning game using "manufactured spend" may end up actually creating additional hassles for US taxpayers.
It's amazing that the tracking of basically your every move is an accepted practice.
Last edited by Ocn Vw 1K; May 1, 2013 at 9:51 pm Reason: Combine consecutive posts of same member.
May 2, 2013, 3:30 am
#4
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Expect more IRS audit hassles when all this info from third parties is going to be used a lot more by the IRS.
IRS administrative pulls and processing of credit card and travel data puts US FTers who maximize the miles and points game at a substantial risk of falling outside the "norm" and getting hit with more auditing hassles than has been the case before. Manufactured spending to maximize return from loyalty program credit cards doesn't help keep FTers within the "normal" range. Frequent travel apparently beyond the declared income means may also raise red flags.
I am not surprised that there hasn't been more concern from FTers about the government using third party information to "size us up" -- the government does it for the PreCheck and Global Entry "trusted traveler" nonsense and the concern about that is a niche concern on FT. But with this IRS aspect, the concern isn't any greater? It should be. Manufactured spend on loyalty program affiliated credit cards and frequent travel beyond the "normal" is a big part of FT. The IRS seems more interested in this than ever before and also more capable of (mis-)using this information than ever before.
May 2, 2013, 8:36 am
#5
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If the IRS starts using on-line data to track individuals, they could create "witch hunts", causing super headaches for taxpayers. [The IRS's general MO is that you are guilty until you prove yourself innocent.
]
Real example (for me
) of IRS "incompetence": Two years ago about a month after I filed my tax return, I realized I had not declared a sale of stock, and immediately filed an amended return. About a year later I received a notice from them that I owed taxes on that sale. I phoned them and they confirmed that they did receive the amended return--BUT, the department that sends out notices of unreported items, does not have access to amended returns--so what should have been a simple correction, required me to send lots of extra documentation...a PITA.
]Real example (for me
) of IRS "incompetence": Two years ago about a month after I filed my tax return, I realized I had not declared a sale of stock, and immediately filed an amended return. About a year later I received a notice from them that I owed taxes on that sale. I phoned them and they confirmed that they did receive the amended return--BUT, the department that sends out notices of unreported items, does not have access to amended returns--so what should have been a simple correction, required me to send lots of extra documentation...a PITA.
May 2, 2013, 9:57 am
#6
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Location: south of WAS DC
Posts: 10,131
If the IRS starts using on-line data to track individuals, they could create "witch hunts", causing super headaches for taxpayers. [The IRS's general MO is that you are guilty until you prove yourself innocent.]
Real example (for me) of IRS "incompetence": Two years ago about a month after I filed my tax return, I realized I had not declared a sale of stock, and immediately filed an amended return. About a year later I received a notice from them that I owed taxes on that sale. I phoned them and they confirmed that they did receive the amended return--BUT, the department that sends out notices of unreported items, does not have access to amended returns--so what should have been a simple correction, required me to send lots of extra documentation...a PITA.
]Real example (for me
) of IRS "incompetence": Two years ago about a month after I filed my tax return, I realized I had not declared a sale of stock, and immediately filed an amended return. About a year later I received a notice from them that I owed taxes on that sale. I phoned them and they confirmed that they did receive the amended return--BUT, the department that sends out notices of unreported items, does not have access to amended returns--so what should have been a simple correction, required me to send lots of extra documentation...a PITA.i screwed up by sending a 1099-2008 in twice and paying twice. did not send in a2009-1099. got dinged big time, even though the money had been delivered. could not make it go away.
May 2, 2013, 10:59 am
#7
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nrr said he/she filed an amended return correcting the issue a month later and then got dinged on the original return a year later. Not sure how your reply is relevant.
May 2, 2013, 11:05 am
#8
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What about personal privacy? It sounds like the IRS is saying we can dig into your entire financial life without your consent, and then use that information anyway we want. Catching tax cheats is a good idea, but not by letting the government know about every financial transaction we make.
May 2, 2013, 11:12 am
#9
Join Date: Dec 2004
Posts: 7,900
What about personal privacy? It sounds like the IRS is saying we can dig into your entire financial life without your consent, and then use that information anyway we want. Catching tax cheats is a good idea, but not by letting the government know about every financial transaction we make.
May 2, 2013, 11:18 am
#10
Join Date: Apr 2012
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If the IRS starts using on-line data to track individuals, they could create "witch hunts", causing super headaches for taxpayers. [The IRS's general MO is that you are guilty until you prove yourself innocent.]
Real example (for me) of IRS "incompetence": Two years ago about a month after I filed my tax return, I realized I had not declared a sale of stock, and immediately filed an amended return. About a year later I received a notice from them that I owed taxes on that sale. I phoned them and they confirmed that they did receive the amended return--BUT, the department that sends out notices of unreported items, does not have access to amended returns--so what should have been a simple correction, required me to send lots of extra documentation...a PITA.
]Real example (for me
) of IRS "incompetence": Two years ago about a month after I filed my tax return, I realized I had not declared a sale of stock, and immediately filed an amended return. About a year later I received a notice from them that I owed taxes on that sale. I phoned them and they confirmed that they did receive the amended return--BUT, the department that sends out notices of unreported items, does not have access to amended returns--so what should have been a simple correction, required me to send lots of extra documentation...a PITA.It'll only get worse if they have access to even more data.
May 2, 2013, 12:33 pm
#12
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Gee I wannabee an IRS Auditor - here is my PO Box Number for sending that money to me that you don't owe. The more you send the less you will owe. I'll accept boxes of dollar coins and all other forms of cash. 
With pardons to Harry Belafonte:
Shake, shake, shakedown, Señora, shake your body line
Shake, shake, shakedown, Señora, shake it all the time
With pardons to Harry Belafonte:
Shake, shake, shakedown, Señora, shake your body line
Shake, shake, shakedown, Señora, shake it all the time
May 2, 2013, 12:53 pm
#13
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May 2, 2013, 1:23 pm
#15
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I am sure that it sometimes will be a problem with the IRS -- as when expenditures on credit cards far exceeds the normal range for other persons with similar revenue and/or income as shown on tax filings, previous or otherwise.
Expect more IRS audit hassles when all this info from third parties is going to be used a lot more by the IRS.
IRS administrative pulls and processing of credit card and travel data puts US FTers who maximize the miles and points game at a substantial risk of falling outside the "norm" and getting hit with more auditing hassles than has been the case before. Manufactured spending to maximize return from loyalty program credit cards doesn't help keep FTers within the "normal" range. Frequent travel apparently beyond the declared income means may also raise red flags.
I am not surprised that there hasn't been more concern from FTers about the government using third party information to "size us up" -- the government does it for the PreCheck and Global Entry "trusted traveler" nonsense and the concern about that is a niche concern on FT. But with this IRS aspect, the concern isn't any greater? It should be. Manufactured spend on loyalty program affiliated credit cards and frequent travel beyond the "normal" is a big part of FT. The IRS seems more interested in this than ever before and also more capable of (mis-)using this information than ever before.
Expect more IRS audit hassles when all this info from third parties is going to be used a lot more by the IRS.
IRS administrative pulls and processing of credit card and travel data puts US FTers who maximize the miles and points game at a substantial risk of falling outside the "norm" and getting hit with more auditing hassles than has been the case before. Manufactured spending to maximize return from loyalty program credit cards doesn't help keep FTers within the "normal" range. Frequent travel apparently beyond the declared income means may also raise red flags.
I am not surprised that there hasn't been more concern from FTers about the government using third party information to "size us up" -- the government does it for the PreCheck and Global Entry "trusted traveler" nonsense and the concern about that is a niche concern on FT. But with this IRS aspect, the concern isn't any greater? It should be. Manufactured spend on loyalty program affiliated credit cards and frequent travel beyond the "normal" is a big part of FT. The IRS seems more interested in this than ever before and also more capable of (mis-)using this information than ever before.