IRS to Implement Online Tracking Technology

The IRS is reportedly set to implement new online tracking technology, using enhanced data analytics, as a measure to watch for tax fraud.

The full extent of the new technology is still unclear, but AccountingWeb.com reports that a variety of sources have provided information about how the IRS will track online activity. Reports say the system works similarly to cookies that businesses already use to track consumer movements and target them for advertising, but takes advantage of the other information the IRS has access to, including social security numbers and credit card transactions.

That system would combine and analyze public and private information in the new models that are designed to pinpoint suspicious activity related to taxes. The model would analyze social media, Internet address and email patterns. Red flags raised in these searches could lead to audits. Current information suggests that the new online tracking technology will be targeted at individuals, though it hasn’t been specified if businesses will be watched, as well.

The technology is highly sophisticated, boasts Dean Silverman, head of a private group working with the IRS on the new system. “Private industry would be envious if they knew what our models are,” he said on AccountingWeb.com.

The reports indicate that the IRS is the latest entity to make a foray into big data, but it’s not the only government agency to show an interest in more sophisticated analytics. This April, the White House marked the first anniversary of its big data initiative, a plan that committed an initial $200 million from six federal departments to find and implement new technology that can better capture and analyze large datasets. These initiatives are aimed at using big data to enhance economic growth and improve areas like health care and education.

Government entities’ interest in big data is further indication of the explosive growth in this area, and the massive need for talented analyst and employees with IT skills. Gartner Research, for example, predicts 4.4 million new IT jobs will be needed in the next few years to support the boom in this area, although not everyone is sure that the talent pool will be ready to fulfill those needs. A frequently cited 2011 report by researchers McKinsey & Company, for example, predicted shortfalls of 140,000 to 190,000 U.S. workers by 2018.

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