Government Computer News
IRS and Agriculture efforts strike pay dirt
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Image: Susan Whitney-Wilkerson
Using analysis tools is necessary because “part of our problem is we’re almost drowning in data,” Agriculture’s Garland Westmoreland says.
Data mining sifts the gems from digital ore
The IRS’ Offshore Credit Card Program is designed to identify tax evaders who take their money to banks in countries with lax and secretive banking laws and access it through credit cards.
Data-mining applications help the Agriculture Department’s Risk Management Agency identify suspicious crop insurance claims filed by farmers.
Data-mining and link analysis applications flag anomalies among masses of data, making it easier for investigators to spot people trying to take advantage of limitations in federal enforcement.
The cost
“There’s nothing illegal about having an offshore bank account or credit card, but if you’re not reporting it and you’re using it as a vehicle to hide your income, then that’s a problem,” said John McDougal, a lawyer with the IRS’ Small Business/Self-Employed unit and the Offshore Credit Card Program. The IRS loses at least $70 billion a year in tax revenue from such tricks, he said.
“We’ve been trying to deal with this for many years but never had an adequate way to get a handle on it,” he said. Data-mining applications help turn up information about offshore cardholders, giving the IRS leads for investigations.
The IRS studies credit card transactions and spending patterns of those using offshore cards. The card-issuing banks might be in the Bahamas or Cayman Islands, but the credit card transactions generally are processed on computers in the United States. The IRS has gained court-approved blanket summonses to secure offshore transaction data from MasterCard International Inc. and Visa USA for 31 countries that are known tax havens.
“The credit card companies don’t know who the cardholders are. Only the issuing bank knows that, and the issuing banks are in the secrecy jurisdictions,” McDougal said. But the transactions on the cards offer clues with merchant names and geographic locations.
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