Monday, April 12, 2010

Government Goes High-Tech to Catch Tax Offenders

Government agencies are beginning to use more advanced computer analytics to catch tax evaders these days. I was reading on that one such example is in New York, where the state is using a program by IBM called Tax Collections Optimizer which searches through filing histories, income patterns, occupations and bankruptcy filings, among other data points, to find discrepancies with current tax filings.

State tax agencies and budget experts estimate that lost revenue from tax evaders averages out to billions of dollars a year per state. At the federal level, the Internal Revenue Service estimates delinquent tax debts amounted to about $300 billion in 2008.

Chances of getting caught as a tax offender are greater with the use of analytics like these. New York had already been collaborating with IBM for more than a decade on another technology called the Tax Audit and Compliance System, which used similar analytics to identify questionable refund claims. Since 2004, IBM's technology has saved New York from losing more than $1 billion, according to state officials.

New York isn't stopping there: The state plans to work with IBM to analyze and collect lost sales taxes from businesses, which amount to billions of lost revenue every year.

Read the full article here.

Blog Archive