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Curiosity killed the cat

Nearly half a dozen IRS workers at the agency’s Fresno, California facility were charged with computer fraud and unauthorized access to tax return information last Monday: prosecutors accused Corina Yepez, Melissa Moisa, Brenda Jurado, Irene Fierro and David Baker of snooping around taxpayers’ private tax information for personal purposes.

The five may have been caught by new algorithms deployed by the IRS to root out curious tax workers, which can be applied retroactively to access records stretching back for years.

According to the IRS, the five workers accused accessed between one and four records per person, sometime in 2005. The total number of compromised tax returns stands at 13.

“The IRS has a method for looking for unauthorized access, and it keeps audit trails, and occasionally it will pump out information about who's done what,” said prosecutor Mark McKoen, who will be leading the federal case against the Fresno five. “In general terms, IRS employees are only authorized to access the accounts of taxpayers who write in. They're not allowed to access friends, relatives, neighbors, [or] celebrities.”

Apparently, curious employees are a recurring problem for IRS investigators: with 430 known cases of improper access in 1998, and 521 in 2007. Problems occur frequently enough that nosy employees caught browsing are guilty of what the agency calls “UNAX,” or “unauthorized access”: Employees found in UNAX are typically disciplined internally, and a handful are slapped with misdemeanor charges of violating the Taxpayer Browsing Protection and Computer Fraud and Abuse Acts.

“Whether the intent is fraud or simply curiosity, the potential exists for unauthorized accesses to tax information of high-profile individuals and other taxpayers,” said Inspector General for Tax Administration J. Russell George. “The competing goals of protecting this information and achieving workplace efficiencies become even more difficult as technology becomes faster and more complex.”

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RE: Here is an idea...
By The Irish Patient on 5/14/2008 12:58:48 PM , Rating: 3
I really like the idea of a simplified tax system, but the problem is really the opposite from what you suggest.

Personal and business taxes are based on different concepts. Personal income tax starts with gross income, with only limited deductions for the necessary expenses of living and working. Business taxes start with the proposition that the corporation is allowed to deduct every conceivable expense of existing and doing business, with only the remainder (if any) subject to tax.

So while large corporations like to remind you of how high a percentage of their net income (profit) is taxed, the taxes are very small compared to gross income. The last time I checked, the federal taxes of General Motors only amounted to some 2% of gross income. Meanwhile, I earn just about enough to own a starter home in New England, and I pay about 15% of gross income as federal tax.

A uniform flat tax of 5% or 10% would be a huge savings to me, but it would be a real kick in the pants to General Motors. The flat tax concept can't get past campaign rhetoric unless the politicians have the political courage to explain to people that there are good economic reasons why their flat tax should be three to five times higher than the flat tax on a multi-billion dollar corporation like GM. Unfortunately, political courage is in very short supply.

RE: Here is an idea...
By MagnumMan on 5/14/2008 2:23:55 PM , Rating: 2
You wouldn't be able to afford the increased price of a GM-made car after implementing a flat tax. If their taxes increase by 8% then you know car prices will go up by at least 8%. So no matter where you hit the tax plan, it will eventually get you in the end and you'll be back to the same cost. I'm all for a simpler system though. The one thing that completely bothers me is multiple taxation. Why should I pay sales tax on something I buy when the money I am using to buy it has already been taxed (by both federal and state governments)? That's what really irks me.

RE: Here is an idea...
By joex444 on 5/14/2008 7:36:33 PM , Rating: 2
YOU don't. That's what very few of us realize.

Sales tax is a RETAIL tax paid by the business. It is just common practice to let the consumer pay the tax upfront and set aside that money to pay the state.

In the end, the sales tax money does reach the state, but it goes through the retail chain.

I personally would like a law which forbids this practice, but you know that if they abolish that then the retail stores just up the item price to maintain their bottom line.

RE: Here is an idea...
By dever on 5/14/2008 3:06:43 PM , Rating: 2
How can anyone really believe that additional cost will not be passed on to the consumer? It's not even possible. A company must pay all of it's expenses (materials, labor, taxes) to continue to compete. These expenses are automatically reflected in a companies single source of income... it's customer... YOU.

RE: Here is an idea...
By Ringold on 5/15/2008 1:09:06 AM , Rating: 2
Dever already commented on one thing..

.. but on another.. I'd suggest the concept is identical.

Fair warning: I'm not an accountant. That said, I find 'gross income' to be misleading. Revenue is a much better word. Income conceptually sounds like profit. When you get a pay check, thats a pure profit flowing in to your household. The government taxes your profit, the government taxes corporations profit. Indeed, if you bother to go to the trouble, you too can deduct a lot of things. God bless Turbotax, I was able to deduct expenses I didn't even think about with respect to my investments.

Therefore, a uniform flat income tax would impact you and GM in similar ways. If GM ran a loss, they'd pay no taxes. If you personally did not work, you'd pay no taxes. To try to suggest corporations are getting a tax break is an argument on extremely frail factual ground, particularly when Exxon alone pays more in taxes than the bottom 50% of all American tax payers.

"So, I think the same thing of the music industry. They can't say that they're losing money, you know what I'm saying. They just probably don't have the same surplus that they had." -- Wu-Tang Clan founder RZA

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