The IRS recently signed a seven-year, $99-million deal with a private company for data mining software to help the IRS track down and prosecute tax cheats. The technology can sift through mountains of taxpayer information, exposes suspicious activity, and identify cases for possible audit. With tight budgets, the software boosts efficiency.
The IRS is being overwhelmed by data volume that reached the equivalent of 1.5 million text files last year, a ten-fold increase in a decade. The data mining software gives the IRS the ability to pursue tax cheats by connecting the dots in millions of tax filings, bank transactions, phone records, and even social media posts.
For example, if a taxpayer moves assets from a European bank to the Cayman Islands and then uses various ATMs to withdraw cash to purchase a second home in Florida, the new software can connect those dots and present a package of information that can be used by the IRS to initiate an investigation.
The software can also be used to catch someone who claims a certain deduction in a tax filing and then posts pictures on social media that contradicts the information.
While the IRS is filing fewer tax cheating charges than it once did, it is using the data-mining software to identify the cases that will yield the highest return and that IRS has the best chance of winning.
Get The Assistance of Our Competent Virginia Tax Attorney
In a civil audit, an IRS agent will try to determine if there is a clear indication of fraud. With this new software resource, the agent will have a lot more information than in the past. Therefore, if a taxpayer gets an audit notice, it is more important than ever that the taxpayer immediately get the assistance of our competent Virginia tax attorney today.