With all the recent hubbub about out-of-state sales tax laws, the new year has been packed with tax developments for online sellers lately, as both employers and the government strive to adapt with the digital age.
And now, according to a recent information request to the National Office of Procurement by the IRS, the tax agency could start using social media to catch tax evaders.
“Businesses and individuals increasingly use social media to advertise, promote, and sell products and services,” the IRS states. “For example, taxpayers can create ‘online stores’ on social networking sites free of cost.
Much of this information is unrestricted, allowing the public, businesses and various governmental agencies to discover taxpayers’ locations and income sources. But the IRS currently has no formal tool to access this public information, compile social media feeds, or search multiple social media sites.”
This is a problem, however, that the agency plans to fix over the following months.
Being careful not to violate personal rights or privacy laws, the IRS seeks to create a social media search system to comb through public profiles on sites like Facebook, Twitter, and Instagram and provide:
• Information that is easy to explain in a tax court;
• Real-time reports on data publicly released by businesses like new products, sales, and locations;
• Comment threads hosted through an online chat room, blog, or messaging forum;
• Taxpayer biometric data such as pictures, or changes to address and marital status; and
• A capacity to hold and process information of at least 25,000 concurrent individuals.
Similarly, IRS employees are forbidden to use their own personal social media accounts, create fake ones, or “like”, “friend”, and “follow” any taxpayer business for IRS work purposes.
“In addition to respecting taxpayer rights, the IRS will also be mindful that frequently information posted on social media and the internet may be wrong or misleading,” the agency notes.
With an estimated $125 billion in underpaid taxes each year and a net gap of $400 billion due from said tax cheats, it’s generally seen that the IRS could use the extra help of a social media tool – especially in the face of a $782 billion budget deficit, one-third fewer auditors since 2010, and another third set to retire next year.
Time will tell if such a system will work.