Eric Sorensen of WSU News has reported that “The next time you want to tweet something about how much you hate paying taxes, or what you did with your huge tax refund, you might want to rethink it.” Mr. Sorensen referenced the work of Kimberly Houser, a clinical assistant professor of business law at Washington State University’s Carson College of Business, that the IRS is breaking several laws by mining large data sets and combing through social media posts (like Facebook, Instagram and Twitter) in its search for taxpayers to audit.
Mr. Sorensen reported that “According to information obtained by the American Civil Liberties Union, the IRS also has violated the Electronic Communications Privacy Act and legal precedent by obtaining electronic communications without a warrant. This practice, authorized in the IRS audit manual, contradicts the 2010 U.S. v. Warshak ruling, which reaffirmed citizens have a reasonable expectation of privacy in their emails, and the government needs a warrant to obtain them. The IRS agreed in a Senate hearing to cease reviewing emails but said nothing about texts and social media.”
If you wish to read more about Ms. Houser, you can read her 55-page paper in the summer issue of the Vanderbilt Journal of Entertainment and Technology Law.
Whereas the IRS’s Discriminant Inventory Function System (DIF) has been the basis for selecting taxpayers for an audit, it appears that the IRS is now using information technology to broaden its audit capabilities. Patrick Lucas Austin reported on the above article and stated that in addition to the “32,000 categories of metadata and 1 million unique “attributes” to determine who to investigate,” the IRS has used Google Maps. Mr. Austin mentions that the IRS obtained photos of a homeowner’s association to revoke its tax exemption.
Mr. Austin stated that “means your pictures of your new sports car could put you in the spotlight, especially if it coincides with a mistake or two made when you filed your taxes. Organizations like the ACLU have filed lawsuits against the IRS ending with rulings stating the agency can no longer collect personal emails without a warrant, and government officials have criticized the agency—in 2015 South Dakota Senator John Thune slammed the IRS for “misguided decisions” and participating in this illegal practice at the detriment of consumer privacy. It’s possible watchdog organizations will succeed in putting a stop to IRS’ social media stalking, but for now, it’s another example of seemingly innocuous information posted online being used to target individuals, whether it’s to advertise to them or to audit them.”
When we represent a taxpayer before the IRS, one of the representation steps we take is to Google the taxpayer to see what we can find on line. Why? Because we know that the IRS will be doing the same.
If you would like to discuss your business or personal tax planning, tax preparation and other financial concerns with an experienced tax professional, we invite you to call 610-594-2601 today to make an appointment at our Exton PA CPA office to discuss your situation. You can also schedule a consultation at Click Here.