The IRS Wants to Use Social Media to Catch Tax Cheats

The Internal Revenue Service is looking for ways to scour social media platforms like Facebook, Instagram, and Twitter in its ongoing quest to catch tax cheats.

That’s according to a request for information issued December 18 by the IRS’ National Office of Procurement. The mining of social media data by the agency has been suspected in the past, but the IRS has never before confirmed the practice.

“Businesses and individuals increasingly use social media to advertise, promote, and sell products and services,” the IRS solicitation reads. “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.”

Current IRS policy regarding its employees’ use of internet-based social media research is “largely prohibitive,” it continues. Workers are barred from using their personal social media accounts for work, nor are they allowed to create fake accounts to perform compliance-related tasks. The IRS also “prohibits fictitious ‘friending,’ ‘liking,’ and ‘following’ a person or business.”

Evinnia Lenick, a senior program analyst with the IRS who is overseeing this stage of the initiative, and Kelvin Bogan, the contract specialist on the project, did not immediately respond to a request for comment.

The agency can certainly use all the help it can get, especially in the face of a budget deficit that has swollen under president Donald Trump to $782 billion; corporate tax receipts have dropped $92 billion year-over-year. The IRS is also working with fewer resources: As of last year, it had 9,510 auditors, one-third fewer than it had in 2010. It conducted 675,000 fewer audits in 2017 than it did in 2010, a drop of 42 percent. What’s more, nearly a third of current IRS employees will be eligible to retire in the next year.

As such, the IRS is looking for a social media search tool that will, among other things:

• Provide a product that is easily explainable in court.
• Provide real time, customizable reports of publicly available social media information (provided or advertised by businesses), such as new products, current sales, and new locations.
• Provide reports showing that a taxpayer participated in an online chat room, blog, or forum, and reports showing the chat room or blog conversation threads.
• Provide available biometric data, such as photos, current address, or changes to marital status.
• Provide access for at least 25,000 concurrent users.

“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 IRS solicitation notes.

The IRS request goes out of its way to point out that whatever tool the selected vendor creates, if ultimately utilized, will only help auditors shore up previously identified cases, and will “not be used to search the internet or social media sites for purposes of identifying or initiating new tax audits.” It also says agency officials believe such a tool can help in the fight against identity theft, although it does not explain how this would work.

Product demonstrations are due the week of January 28, 2019.

American businesses underpay their taxes by $125 billion each year, according to IRS estimates. Overall, the tax agency reports a net tax gap of more than $400 billion annually due to tax evaders.