The IRS is Breaking the Law?

Is the IRS Reviewing Your Social Media Posts?

Okay, this really does not have anything to do with a self-directed IRA or self-administered 401(k) plan (otherwise, referred to as a Solo-K, Uni-K, self-directed 401(k), one-participant 401(k), etc.), but I found it of interest.  In short, I read a recent position paper by Kimberly Houser (Washington State University) posted in the Vanderbilt Journal of Entertainment and Technology Law claiming the IRS is breaking the law.  Houser opines the IRS is breaking the law by mining large sets of data and reviewing individuals social media posts in attempts to find people to audit based on comments they make on various social media outlets.

The IRS is Breaking the Law?

Houser, a clinical associate professor of business law at WSU, claims the IRS is breaking privacy law by:

  1.  Collecting information and data on taxpayers without informing them;
  2.  By not informing the taxpayer, the IRS is not giving the taxpayer their legal right to review the information collected on them, but also the opportunity to correct something they believe may be wrong.

In Houser’s professional opinion, both items #1 and #2 violate the fair information practices which are part of the Privacy Act of 1974.  Houser notes that not only is the IRS not informing people, because they are not informing people, the taxpayer doesn’t even have the chance to review the information the IRS has collected on them.

If That Ain’t Enough

Houser states that she is not the only one that believes the IRS is breaking the law.  Specifically:

ACLU — The ACLU has taken the position the IRS is breaking the law by violating the Electronic Communications Privacy Act by obtaining such electronic communication of taxpayers without obtaining a warrant.  With this Act, taxpayers have a general right to privacy and the Act requires the IRS to have a warrant to secure email correspondence.  But, apparently, the IRS has taken the position that this protection does not apply to text messages and social media posts based on their review of these types of correspondence and postings.

Computer Matching and Privacy Protection Act — Probably as disturbing is this Act which states that an agency “maintain in its records only such information about an individual as is relevant and necessary to accomplish a purpose of the agency”.  In addition, it is expected that an agency verify the validity of the information it is gathering. I think it is pretty fair to say that not only may text and social media posts not be relevant and necessary for the IRS to execute their responsibilities, they may not even be accurate, which would lead one to believe that the IRS is probably not attempting to or able to verify that the posting(s) are, in fact, even correct.

Bottom Line:  Due to budget cuts and other constraints they have facing, the IRS has been more aggressive in easier, less expensive measures to collect data on people.  They have done this through public and commercial data sources and reviewing public social media sites.  I’m not sure I can spell the word “algorithm” let alone define it, but even when someone is not doing anything wrong, it is kind of creepy that the IRS would be possibly reviewing someone’s online posts….but, oh well.  Let the lawyers and decision-makers determine the legality of such actions taken by the IRS, but I thought the original story on the topic might be of interest.

As always, the information provided is intended to be educational in nature.  It is not intended, nor should it be interpreted, as any form of tax, legal, financial or investment advice.  One must always consult with their respective professional in all such matters.