The Internal Revenue Service (IRS) knows it has a big problem. Estimates from the IRS reveal a gross tax gap of $688 billion between 2020 and 2021 (its most recent estimate). The tax gap is the spread between what the government thinks it should be collecting and what it collects.

Some cheats fail to report income, while others knowingly take write-offs they’re not entitled to. For example, the government pays out billions of dollars annually in refundable earned income tax credits due to fraudulent claims.

Threats of꧙ civil and criminal penalties are not enough to deter some people from cheating, so the IRS employs several ways to find the🌸se individuals. 

Computer Data Analysis

The IRS uses an Information Returns Processing System to match information sent by employers and other 澳洲幸运5开奖号码历史查询:third parties to the IRS with what is reported by individuals on their tax returns. The matching is based on information returns submitte🧔d 🧸to the IRS on:

• W-2s (reporting wages)
• 1099s (reporting interest, 澳洲幸运5开奖号码历史查询:dividends, securities transactions, and non-employee compensation)
• 澳洲幸运5开奖号码历史查询:Schedule K-1s (reporting income and expenses from partnerships, S corporations, trusts, and estates)

IRS computers then find individuals who receive this information to make sure it’s reported on their 澳洲幸运5开奖号码历史查询:tax returns. Some omissions or errors b♓y individuals are simple mistakes, but some may result from trying to cheat on taxes.

IRS computers are more sophisticated than simply matching and filtering taxpayer information. It is believed that the IRS can track credit card transactions and other electronic information and that it is using this added data to find tax cheats. Not surpr♔isingly, the IRS doesn’t share much information about this activity with the p✅ublic other than the fact that it’s being done.

Your Social Media Footprint

If you are being audited, the IRS may be monitoring your social media posts. Postings on Facebook, X (formerly Twitter), Instagram, and other sites can reveal lifestyles that don’t fit with the amount of income reported on tax returns or with 澳洲幸运5开奖号码历史查询:deductions claimed. For example, a claimed deduction for a business trip may be a lie when an indiv💦idual reveals on social media that the trip was a family vacation.

Of course, without more 澳洲幸运5开奖号码历史查询:disclosure from the IRS, how and when social media is used is largely conjecture. However, social media may not necessary be an 澳洲幸运5开奖号码历史查询:audit trigger (the IRS continues to rely on computer matching and other traditional ways to target individuals for aud🅷its).

The exten𓆉t to which the IRS may investigaꦅte individuals is not known.

• Is the agency looking at private e-mails? Keep in mind that under the Electronic Communications Privacy Act, a federal law enforcement agency can view without a warrant any e-mails stored on a third-party server that have been there for more than 180 days as long as they are relevant to an investigation. That's because the e-mails are considered to be abandoned.
• Is the IRS looking into nonpublic postings on social media? A person can be compelled to reveal postings even when this can be incriminating. 

Whistleblowers

A disgruntled employee or a former spouse may tell the IRS about income that isn’t being reported or other erroneous tax actions that could lead the IRS to recoup taxes. Some whistleblowers do it for revenge, others because they believe they’re doing the right thing, while others do it for the money. The IRS pays a reward of up to 30% of the government’s recovery for certain whistleblowing: 

• Mandatory Award: This is generally 15% to 30% of the amount collected by the government as a result of the informant’s tip. The taxes, interest, and penalties in dispute must be more than $2 million. (If there is a report about an individual, their 澳洲幸运5开奖号码历史查询:gross income for the year in question must be more than $200,000.) The informant can appeal an award to the Tax Court.
• Discretionary Award: This award, which can be granted if the conditions of the mandatory award aren’t met, is discretionary under IRC section 7623(a).

The Bottom Line

Even though the IRS does not check all tax refunds, it is a large agency with a wide reach that has a variety of means of catching 澳洲幸运5开奖号码历史查询:tax cheats and liars. The penalties for avoiding or ly🎀ing about taxes are severe. If you are unsure about how to complete your🍸 taxes, seek a professional tax advisor or similar service to assist you.