
The IRS has upgraded its technology to track virtually everything you do online - jalanco
http://money.msn.com/credit-rating/irs-tracks-your-digital-footprint#scpshrtu
======
DanielBMarkham
This is an older article. One of the key takeaways is that Congress in 2008
gave the IRS the capability to dive into your personal affairs online in ways
that even the justice department can't (without a warrant). They only need to
view you as somebody of interest.

Better still, the exact nature of all this -- wait for it -- is a secret.

The long-term trend here is pretty clear. Congress has the Big Data hammer
out, and it's not afraid to use it on whatever political cause of the week
makes them upset. NSA was first, because terrorism was so bad. But dang it,
tax cheats are pretty bad too!

There's no slippery slope argument that needs to be made. We're already
sliding down it. Just standby for the next travesty. Don't worry, the wait
won't be long. Maybe a year or two.

The American people remain amazingly ignorant and/or apathetic, though. One
wonders how many wake-up calls it will take.

ADD: The _very_ interesting question here is this: since the IRS is authorized
to go after emails and social chats without a warrant, how are the big service
providers going to report this? Even if Google shows its thousands of NSLs,
this type of activity wouldn't be covered by them. Some more info here:
[http://money.usnews.com/money/personal-finance/mutual-
funds/...](http://money.usnews.com/money/personal-finance/mutual-
funds/articles/2013/04/04/irs-high-tech-tools-track-your-digital-footprints)

~~~
glurgh
_Just standby for the next travesty._

What's the specific travesty here? The IRS already looks at and analyzes your
private financial data both as reported by you and others and this is
generally considered acceptable and a necessary part of them doing their job.
So say now they noticed you reported $20k in gross annual income but are
buying Ferraris on eBay. It seems pretty reasonable to assume, from that piece
of public data that you might be mis-stating your taxable income.

~~~
ams6110
If congress would simplify the tax code, it would be both harder to cheat and
vastly easier for the honest to pay their taxes. And the IRS wouldn't need to
snoop into everyone's life.

~~~
tptacek
No simplified tax code proposal I've read would eliminate the problem of
people doing cash transactions under the table, or "loaning" themselves a
house and treating that as a business asset.

~~~
theflyingkiwi42
The Fair Tax would take care of most of that. Any transaction with a business
would have sales tax. There are no write offs, so the business asset would not
fly, neither would be buying Ferraris.

[http://www.fairtax.org/site/PageServer?pagename=HowFairTaxWo...](http://www.fairtax.org/site/PageServer?pagename=HowFairTaxWorks)

~~~
thaumaturgy
Every time I've looked at the Fair Tax proposal, I've been underwhelmed and
thought the name was the same sort of anti-nomer as the Patriot Act. But maybe
you can change my mind.

It's a tax on buying. Think about that for a moment. Fair Tax proponents claim
that the current tax system causes disincentives for things like exports and
U.S. manufacturing. Why would the Fair Tax proposal then not cause a
disincentive on the demand side of the economy? ("How will the plan affect
economic growth" in the FAQ clearly espouses a particular economic ideology
that has yet to be supported by any of the facts of history.)

It also places the entire tax burden on the consumer. Annual pre-tax corporate
profits are somewhere between $800 billion and $2 trillion, depending on which
data you decide to believe. Why is all that money being left on the table in
favor of drawing the entire national budget from consumers?

~~~
ars
Tax already has an effect on demand - it reduces income, which reduces
available money. This just makes it more obvious.

Corporations are owned by people (consumers as you call them), tax the person,
not the intermediary.

And in any case the corporation would also have to pay the tax on everything
they buy.

~~~
eightyone
You should check out the link I posted above. Under the FairTax the highest
and lowest brackets will see their share of taxes go down. Everyone who makes
between $15,000 and $200,000 will see their share of taxes go up.

------
tptacek
This article makes reference to a 38-page manual uncovered by EFF, in the
context of a story about broad claimed authority by the IRS to examine online
data to defend tax challenges. What the article doesn't say is that the manual
was praised by EFF: it instructs IRS employees only to use public information,
never to misrepresent themselves or attempt to gain access to people's social
networks by posing as "friends", and never to use confidential information as
search terms.

At one point, the manual explains to examiners how to use DomainTools to
search for domain names, but cautions examiners that the site may ask for
email addresses sometimes, at which point the examiner is _no longer allowed
to use the service_ and must instead revert to asking the taxpayer questions.

It's this kind of writing that drives me crazy. IRS may be overreaching, or
they may not be; who knows? We get all our information through a game of
telephone by media organizations that incentivized to write the most lurid
stories possible.

~~~
pash
_> It's this kind of writing that drives me crazy. IRS may be overreaching, or
they may not be; who knows?_

Yes, that's the point. Breathless speculation is obnoxious, but that's all
we're left with when our government hides its activities from us.

~~~
tptacek
Nobody needed to speculate about what the IRS manual said; it was right there
for them to read.

~~~
pash
Yes, the article makes clear that the EFF acquired the manual via a FOIA
request and that (like all such documents) the manual is now public. We know
what's in the manual (guidelines for IRS employees on how to conduct
themselves online).

What we don't know—what the article speculates about—is what's in the IRS's
databases, how those databases are populated, and the extent of the IRS's
claimed powers in audits generally. As with the NSA's secret surveillance
program, we're left guessing what's under the IRS's gaze and what oversight,
if any, ensures that its scrutiny is circumscribed to what's appropriate in a
free society.

------
jchung
Part of me wants to protect my purchasing decisions from public view. Another
part of me wishes the IRS would use that data to just calculate my taxes for
me so I don't have to do this ridiculous paper dance every winter.

~~~
cowsandmilk
yeah, this is pretty much the flip side of the ProPubica report on
TurboTax[1][2]

[1] [http://www.propublica.org/article/how-the-maker-of-
turbotax-...](http://www.propublica.org/article/how-the-maker-of-turbotax-
fought-free-simple-tax-filing)

[2]
[https://news.ycombinator.com/item?id=5443203](https://news.ycombinator.com/item?id=5443203)

------
lifeisstillgood
Holy lucre ! 300 billion in lost _revenue_. That has to be wrong. Even at a
tax rate of 30% (way higher than the US effective rate) that implies one
trillion dollars each year gets hidden from the IRS.

That will solve every budgetary crisis going.

~~~
throwaway420
Except you forgot to fast forward to the part where politicians, having even
more funds at their disposal to try to gain more power, decide to use that
extra money to increase spending even more.

And contrary to the faux Mother Theresa like notion of government that some
people like to project, that money will not mostly go towards relatively
positive things like feeding hungry children, giving a helping hand to out of
work people, or building libraries. This extra cash will mostly go to agencies
like the NSA to spy on people more, subsidies to big farming companies,
payoffs to the right corrupt dictators, to the FBI to throw more people in
cages for consuming a plant, or to corrupt military contractors to build more
useless bombs for the next war.

The 16th Amendment (income tax) was only instituted in 1913 and the whole
income tax is based on the disgraceful concept that you don't own the fruits
of your labor but the government gets it before you do and only allows you
whatever cut of it that they can decide on. The US was incredibly prosperous
up until that time and was completely functional mostly running on limited
tariffs. We would be even more prosperous today without the government sucking
up such a large portion of creative wealth that exists in this country.

The IRS should flat out be abolished not just for economic reasons, but also
for political reasons. It is unacceptable that they are spying on people even
more and that their power can be used to target political enemies.

~~~
dragonwriter
> The 16th Amendment (income tax) was only instituted in 1913

The 16th Amendment was instituted in 1913, but the first US federal income
taxes were adopted during the Civil War, and the first peacetime federal
income taxes were adopted in the 1894.

The 16th Amendment wasn't passed to give Congress the power to collect taxes
on income, it was passed mainly to expand Congress well-established existing
power in that domain to include the power to tax income from on sales of real
and personal property without apportionment according to population as a
direct tax (and to avoid future similar problems that might apply to some
other sources of income), in response to _Pollock_ v. _Farmers ' Loan and
Trust_, 157 U.S. 429 (1895).

~~~
1123581321
It wasn't well established. Income tax had been found to be unconstitutional.
An "excise tax", which was the same thing, was implemented as a workaround.
The income tax amendment eliminated the unconstitutionality decisively and was
championed by the Prohibition movement.

~~~
dragonwriter
> Income tax had been found to be unconstitutional.

No, it hadn't. As I stated earlier (and cited the case in which the decision
was made), tax on certain forms of income (specifically, income from sales of
property) was ruled to be a direct tax requiring apportionment under the
Constitution.

> An "excise tax", which was the same thing, was implemented as a workaround.

Presumably, this is a reference to the Corporate Excise Tax of 1909, which
wasn't the same thing, as the Court had explicitly previously ruled that a tax
_on corporations_ that was an excise for the privilege of operating a
corporation, even when assessed by income, and even when the income included
income from sales of property, was not a "direct tax" under the Constitution
and thus did not require apportionment.

> The income tax amendment eliminated the unconstitutionality

...of Congress taxing income _from sale of property_ without apportionment,
yes. That was the problem with the tax act that had been struck down -- the
fact that it included taxes on that _one particular source of income_ in a
non-apportioned tax.

~~~
1123581321
At no point do you disagree with me.

------
bubbleRefuge
Taxes are to high for the services provided. Laws are mostly written by
lobbyists for large corporations. Now the IRS is going to use "big data"
systems -using input data from Google, Facebook,etc - provided by profit
driven vendors to enforce this treachery on the middle class and upper middle
class b/c they pay the highest tax rates. Its kind of like red-light cameras.
Companies who provide the red-light camera technology share revenue with the
municipalities who they contract with. Perverse incentives.

Makes me want to collect my family and leave the US. Become an expat in a low
income tax state.

~~~
arbuge
You'll have to renounce your US citizenship to escape the long arm of the IRS.
In practice this requires gaining an alternative one first if you're not a
dual citizen.

[http://www.bostonglobe.com/business/2013/04/29/americans-
abr...](http://www.bostonglobe.com/business/2013/04/29/americans-abroad-seek-
tax-law-changes/fiduvux1S5a8i56WiAQCwM/story.html)

------
fnordfnordfnord
Article is from April 10. Was ignored then. Maybe people will have a second
look now.

------
seivan
Sounds like Sweden. Some guy got a fine for saying something on his own
Facebook page about his RV that was under the company. BOM. 400k to be paid.

~~~
pathy
Swedish article on the matter:
[http://www.aftonbladet.se/minekonomi/article16839634.ab](http://www.aftonbladet.se/minekonomi/article16839634.ab)

I have no idea if Skatteverket (IRS equivalent) were right in their decision
but the guy did lose in the first court instance.

Also: If the Facebook page was public and Skatteverket were questioning the
legitimacy of the 'business purchase', why shouldn't they check the page?
Basing the decision on only one status update seems a bit strange though.

~~~
seivan
They weren't questioning or investigating, they outright fined based only on
that status report. Guilty until proven innocent.

~~~
pathy
They probably wouldn't have looked the page unless they were auditing him. He
found their decision unfair and appealed it but lost in court, so at least one
instance considers Skatteverket's claims legitimate.

Now I have less faith in the lower courts than I should but it does bring
legitimacy to Skatteverket's decision.

------
e3pi
Page looks like its from something called `Bing'.

We see:

At the top is a U.S. News & World Report button,

4/10/2013 4:15 PM ET

By Richard Satran, U.S. News & World Report

At the bottom of story we see

`More from U.S. News & World Report:...'

-None of this links back to original source.

If I fb share it, or link it, this `Bing' becomes the link. without more
further digging to get the original url, looks like I have to use this copycat
of full-content `Bing' thing.

------
rplacd
"publicly" seems to be a prominent omission from the title.

~~~
maxerickson
Credit card transactions are mentioned several times in the article.

That isn't closely private information, but it isn't something I would call
public activity.

~~~
asveikau
Banks have sent info on large transactions to the IRS for some time. I don't
see credit card transactions as all that different.

------
shiftb
Did I understand this correctly?

"The IRS last year used a profiling test model to study 1,500 tax preparers
with histories of reporting deficiencies and managed to recover $200 million.
It cited the experience as proof that its data analysis works."

They recovered $200M from 1,500 citizens? That's $133k each. Seems like an
extraordinarily large amount.

~~~
jnw2
If those are 1,5000 professional tax preparers who each perpare taxes for many
taxpayers, it might make sense.

Going after only high income citizens might also create a reasonable situation
where $133k/taxpayer in their biased sample set might happen. It's often not
unreasonable to focus only on those individuals who might produce the largest
numbers...

------
D9u
Meanwhile the fat cats pay little, or no taxes...

GE paid 7% in 2010, partly due to the poor economy.

How many of us wish we could get away with only paying 7% tax?

[http://money.msn.com/taxes/latest.aspx?post=26d490bd-7317-4f...](http://money.msn.com/taxes/latest.aspx?post=26d490bd-7317-4f93-8b43-e1da1151ea5f)

~~~
maxerickson
Do you think it makes sense to compare personal and corporate taxes?
Corporations are generally far better equipped to spend money avoiding taxes,
so it probably makes more sense to try to keep loopholes to a minimum and
evaluate whether the effective rates are appropriate for the parties they
apply to.

The article you link discusses the very wealthy having taxation dominated by
the lower taxes on investment income. I think such taxes could be higher
without having significant impact on investment (lots of rhetoric suggests
that even tiny changes would cause investment to collapse, that's silly), but
there is plenty of room to discuss whether government spending is a better use
of the wealth than private investment (and such taxes do more or less have the
effect of directly moving private investment dollars to government spending).

~~~
gregd
_Do you think it makes sense to compare personal and corporate taxes?_

Yes. Corporations themselves want to apply the Constitution to the corporation
as if they're a "person", therefore, it makes sense to compare the corporate
tax rate to the personal tax rate.

~~~
pathy
No it doesn't. Corporate tax legislation is not the same as personal tax
legislation, therefore a comparison is irrelevant. Even if corporations would
be treated as people, as long as the legislation is different it does not make
sense to compare the two.

You may argue that tax rates are too high or low for both or that there are
too many loopholes but that is a different discussion. I don't think anyone
actually wants to see the same tax legislation for businesses and for people -
it makes no sense what so ever.

~~~
konstruktor
This is the status quo but doesn't address parent's argument. If corporations
want the same rights as natural persons in one area of the law, it would be
cherry picking to want to keep a privileged position in another, e.g. tax law.
A good argument against parent would need to attack the premise that cherry
picking privileges is bad.

~~~
cdjk
Corporate personhood is the easiest way to allow corporations to enter into
contracts and engage in civil litigation. I'd be interested in what opponents
of corporate personhood propose as ways around those problems, which I think
are goods. Having to renegotiate all contracts with a business if the owner
dies doesn't seem very efficient.

With regard to tax law, accounting is generally different between corporations
and individuals. Specifically, individuals use cash accounting while
businesses frequently use accrual accounting. Furthermore, businesses can
deduct far more in expenses than an individual. One can argue about that, but
I think it makes sense when you realize that corporations are ultimately owned
by individuals, but individuals cannot be owned by other individuals or
corporations. Individuals are ultimately the "base case" of ownership, so I
think the different tax treatment of revenue/profit/income makes sense.

~~~
dragonwriter
> Corporate personhood is the easiest way to allow corporations to enter into
> contracts and engage in civil litigation.

Most opponents of corporate "personhood" aren't really opposed to juridical
personhood of corporations and other non-natural persons, they are opposed to
the _effect_ given to corporate personhood in certain domains; corporate
personhood has never been fully equivalent to natural personhood in the law,
and there are quite different ways in which corporations could be treated as
juridical persons without directly holding the particular rights that have
recently caused a lot of people to get offended about "corporate personhood".

------
lawnchair_larry
The technical descriptions in this article basically make no sense at all.
It's worthless.

------
arbuge
Link appears broken - I just get an msn.com sign-up page.

~~~
fnordfnordfnord
Worked for me too. Here, try it without the unnecessary part.
[http://money.msn.com/credit-rating/irs-tracks-your-
digital-f...](http://money.msn.com/credit-rating/irs-tracks-your-digital-
footprint)

~~~
arbuge
Thanks - same result though for some reason...

------
asveikau
Is it me or does this sound like a nutty conspiracy theory?

NSA is one thing... But IRS? I have a hard time believing this is anything but
grossly exaggerated.

------
1morepassword
I love it. An IRS audit based on trawling public data is more likely to wake
up the moronic "I've got nothing to hide" clowns than any total surveillance
by the NSA or the massive cyberstalking by Facebook, Google e.a.

~~~
maxerickson
It probably won't bother the ones that diligently and conservatively determine
their tax liability. I would guess there is quite some intersection between
those groups.

~~~
bthomas
There's a large subset of that intersection that puts a bizarre halo effect
around the NSA (everything they do is good) and the opposite for the IRS. So I
do think this will wake them up.

