This AI Knows Who You Are and Who All Your Friends Are (And Is Telling the IRS)
A Bay Area tech company wants to sell AI (artificial intelligence) surveillance software to determine not just who you are but track who your friends are, too.
Vintra is a San Jose-based firm whose “co-appearance” or “correlation analysis” software can, “with a few clicks,” according to the Los Angeles Times, take any individual on a surveillance camera and backtrace him to those he’s seen with most often. From there, the software can take people deemed “likely associates” and locate them on a searchable calendar.
The Times reports that AI-enabled co-appearance technology is already in use in Communist China as part of that country’s Orwellian “social credit” digital report-and-control scheme, but Vintra appears to be the first company to market it in the West.
It’s already in use by the U.S. government:
The firm boasts on its website about relationships with the San Francisco 49ers and a Florida police department. The Internal Revenue Service and additional police departments across the country have paid for Vintra’s services, according to a government contracting database.
The IRS needs to know who your friends are because reasons. Creepy, authoritarian reasons.
Back in December, I wrote about the time facial-recognition software got a New Jersey woman forcibly removed from a Rockettes show at Radio City Music Hall around Thanksgiving because she works for a law firm engaged in a suit against a restaurant owned by the same parent company, MSG Entertainment, that owns Radio City. The lawyer, Kelly Conlon, was not in any way engaged in the long-running suit.
Ticketmaster, PayPal, eBay are hassling customers to report sales even though the IRS says they don’t have to
People are being told they need to provide their Social Security numbers to online platforms and cash transfer app companies for the sales of things like clothes and concert tickets over $600, even though the IRS says they don’t need to.
The prompts from companies like eBay and Ticketmaster are the result of a change in the tax law that was reneged last-minute by the IRS ahead of the 2023 tax filing season.
The switch is causing a lot of confusion among taxpayers and tax professionals — and even within the IRS itself.
The threshold for reporting business income or personal income from using these apps was supposed to change this year. It was downgraded from sales above $20,000 to sales of above just $600 and was part of a provision passed in the 2021 American Rescue Plan.
That means you’d need to pay a capital gains tax on sales worth more than $600 if you used these apps to receive a payment.
But the IRS decided to delay this rule change from tax season 2023 to tax season 2024, citing “confusion during the … 2023 tax filing season” and the need to “provide more time for taxpayers to prepare and understand the new reporting requirements.”
The IRS said some taxpayers may be receiving 1099-K forms “in error.”
“Some individuals may receive a Form 1099-K for the sale of personal items or in situations where they received a Form 1099-K in error (i.e. for transactions between friends and family, or expense sharing),” the agency said in a statement.
The Case for Abolishing the IRS
The American public has long held an unfavorable view of the Internal Revenue Service, as evidenced by several historical surveys. A Gallup poll taken more than 25 years ago in October 1997 found that 69 percent of the American public held the opinion that the IRS “frequently abuse[d] its powers.” Fast forward to October 2022, when another Gallup poll was taken on the American public’s job-performance rating of 11 federal agencies. The poll ranked the IRS dead last, with only 34 percent of Americans regarding the job performance of the IRS as “excellent/good.”
Another poll released by the Pew Research Center in March 2015 on the “complexity of the tax system” indicated that 72 percent of the American public were at least somewhat bothered by the complexity, and 44 percent were a lot bothered by it. Public concern over the complexity of the federal tax code is certainly understandable when you consider that the body of law that codifies all federal tax laws, the Internal Revenue Code (U.S. Code Title 26), comprised 6,979 pages as of year-end 2022.
Aside from the American public’s unfavorable view of the tax system, there is a real economic reason for addressing its complexity: the enormous cost of compliance for the American taxpayer, both individual and corporate. The Tax Foundation issued a report in August 2022 estimating that “Americans [would] spend over 6.5 billion hours complying with IRS tax filing and reporting requirements in 2022.” This equates to approximately 3.1 million full-time workers focused entirely on federal tax compliance.
The Tax Foundation estimates that the monetary cost of compliance based on its estimated 6.5 billion work hours would at minimum amount to $313 billion in 2022 — nearly 25 times greater than the IRS’s $12.6 billion 2022 budget with a workforce of approximately 80,000 employees.
An additional unknown cost of significant size is the time spent by American taxpayers in calling the IRS for tax-filing assistance. Based on information from the IRS’s Taxpayer Advocate Service, Americans made 72.8 million calls to the IRS in 2022 seeking help. Only 7.4 million calls were answered — just over 10 percent — and these had an average wait time of 28 minutes.
The Taxpayer Advocate Service, an independent organization within the IRS established in 1996 to help Americans address federal tax problems, issues an annual report to Congress every January with an assessment of the IRS’s prior-year operations and some legislative recommendations. The recommendations typically include more amendments to the Internal Revenue Code, more IRS rules and rule revisions, more funding from Congress, expanding jurisdiction of the U.S. Tax Court, and more mandates on the private sector, such as establishing new IRS competency standards for tax preparers. Hence, these ongoing annual recommendations, while well-intentioned, only serve to tinker with a massive system already fundamentally broken and beyond repair.
Gun-Toting Wing of IRS Wants to ‘Put the Fear of God in People’: Ex-Agent
As the Internal Revenue Service seeks to bolster the ranks of its weapon-carrying Criminal Investigation unit, a former special agent described the inner workings of the division and said its key function is “to put the fear of God in people” and intimidate Americans into tax compliance.
Former IRS Special Agent Robert Nordlander told Accounting Today, in a wide-ranging interview published on Feb. 20, that while most Americans have a sense of what IRS tax audits look like, the work of the IRS Criminal Investigation (IRS-CI) unit is shrouded in some mystery.
Dubbed “gun-toters,” the armed special agents in the unit are responsible for enforcing those parts of tax code whose violations amount to crimes, he said. “When crimes are committed, the IRS-CI are the ones that actually enforce” the law, Nordlander said.
The IRS-CI examines potential criminal activity related to tax crimes and makes recommendations for prosecution to the tax division of the Department of Justice (DOJ).
There are now around 2,100 “gun-toters” in the criminal investigations division, and the IRS—flush with funds from a new cash injection—is looking to hire more special agents.
IRS Targeting Fantasy Sports (and much more) with New Tax Code Change: “Most Americans are about to get run over, and they have no idea.”
The IRS continues to be in the news cycle due to a continuous back and forth about how much power it will continue to have, and whether or not it will be weaponized even further against the average American. Even with the current delay of the onerous attempt to hit gig workers with a $600 threshold for reporting, they forge ahead, empowered by an $80 billion investment under the Inflation Reduction Act and some new code changes.
First it was reported that a new IRS alert went out to explain that there would be a new question to answer regarding “digital assets” and how to stay in compliance. Failure to answer accurately could spark and audit and attendant consequences.
“All taxpayers must answer the question regardless of whether they engaged in any transactions involving digital assets,” the agency cautioned.
It is a legal requirement to accurately report all income, including income from digital assets, on federal income tax returns. Failure to do so could result in non-compliance with tax laws and possible penalties. – Source: The Epoch Times
Now there is a new target for tax oversight: your friendly fantasy sports league. Clearly not intending to wage war against billionaire tax cheats as advertised, this latest code change is set to “cause a sizable increase in audits and taxes on Americans, especially those using transaction services like Venmo and PayPal for fantasy sports, according to tax experts,” reports Fox News.
One tax expert, Bruce Willey, even likened it to being put in the path of an oncoming truck.
“Most Americans are about to get run over, and they have no idea. If they’re not prepared for it, things could get pretty ugly for people,” he said.
The same previously mentioned mechanism for gig workers is finding its way into fantasy sports for those who use online apps as their payment systems. Additional scenarios and specifics were described by BakerHostetler Nationwide Tax Chair Jeff Paravano. As one should quickly see, it’s vague, extremely burdensome on all parties involved, and will likely do nothing except drive up the numbers of audits and extortion that will result.
In 2022, The IRS Went After The Very Poorest Taxpayers
On Wednesday, Syracuse University’s Transactional Records Access Clearinghouse (TRAC) released data provided to it by the Internal Revenue Service (IRS) on audits performed by the agency in fiscal year 2022. Despite the infusion of new funding earmarked for the IRS via last year’s Inflation Reduction Act, the agency continued historic trends of hassling primarily low-income taxpayers, with relatively few millionaires and billionaires getting caught up in the audit sweep.
“The taxpayer class with unbelievably high audit rates—five and a half times virtually everyone else—were low-income wage-earners taking the earned income tax credit,” reported TRAC, noting that the poorest taxpayers are “easy marks in an era when IRS increasingly relies upon correspondence audits yet doesn’t have the resources to assist taxpayers or answer their questions.”
In fact, “if one ignores the fiction of auditing a millionaire through simply sending a letter through the mail, the odds that millionaires received a regular audit by a revenue agent (1.1%) was actually less than the audit rate of the targeted lowest income wage-earners whose audit rate was 1.27 percent!”
The Inflation Reduction Act, passed in August 2022, directed $80 billion worth of new funding over the next decade to the IRS so it could hire 87,000 new workers, purportedly to better target millionaire and billionaire scofflaws. The Biden administration and credulous journalists claimed that this would in no way increase audits for those making under $400,000 annually—suspect assurances not provided within the text of the actual bill. This increased capacity meant only those at the top would be targeted, supporters insisted. But this ignores how the IRS’s incentives work and how agencywide reform might be too heavy of a lift.
Got their eye on you…
Just use your imagination. It’s easier than thinking.
IRS Warning Americans to Report $600 Transactions From Payment Processors or Risk Facing Audit
The Internal Revenue Service reminds taxpayers to report transactions of at least $600 made through payment networks like Venmo, Paypal, and Cash App as the agency seeks to obtain data regarding part-time employment and side gigs, a move that critics have termed government overreach.
In a recent explainer posted online, the IRS said that according to the American Rescue Plan Act of 2021, any payment made after March 11, 2021, that exceeds $600 must be reported. The target of the new reporting rule is small business owners, and people working side hustles or part-time gigs for extra income. Earlier the reporting threshold was $20,000 and more than 200 transactions within a calendar year. But, the amended rule applies to a single transaction.
“You should receive Form 1099-K by January 31 if, in the prior calendar year, you received payments from all payment card transactions (e.g., debit, credit, or stored-value cards), and in settlement of third-party payment network transactions above the minimum reporting thresholds,” said the agency.
The reporting guidelines do not apply to noncommercial payments such rent, vacation, food, or one-time transactions like selling something online. The Form 1099-K will be sent by the payment platforms through which the transaction was done.
If a form is received by mistake, “contact the Payment Settlement Entity (PSE) listed on the Form 1099-K” or provide an explanation in the tax return, according to the agency.
Failure to report transactions on Form 1099-K could trigger an audit by the IRS since the agency receives a copy of the form.
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