Social media tax spying

At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here’s an explanation for

“An American has no sense of privacy. He does not know what it means. There is no such thing in the country.”

That famous George Bernard Shaw quote was uttered well before the advent of social media. But it’s worth pondering as we head into the home stretch of the 2013 tax-filing season.

While all the information collected by the Internal Revenue Service is protected by strict privacy statutes, the federal tax collector is well within his investigative rights to peruse what you choose to make public.

So you might want to reconsider bragging on Facebook about buying a Ferrari when you’re reporting just a $30,000 annual income on your Form 1040. Or at least tighten up the privacy controls on your social media account.

The IRS reportedly plans to collect personal information from sites such as Facebook and Twitter as part of its continuing effort to catch tax cheats. The added social media attention reportedly will be given to individuals with tax returns that already have raised audit red flags.

This is not a surprise.

Social media ‘spies’

Advertisers already are data mining all our social media activities, seeking ways to manage public attitudes and encourage us to buy their products.

On the legal front, criminals are regularly caught because of their ill-advised social media discussions about or videos of their illegal activities.

It’s even happened in the tax area. Five years ago, a group of University of Central Oklahoma students bragged on MySpace that their party business had served thousands. That boast caught the attention of the Oklahoma Tax Commission, which promptly issued the young businessmen a $320,000 state tax bill.

I’ll bet Mom and Dad weren’t thrilled when their kids called to ask for help paying the tax collector.

Limited IRS surfing

Will the IRS do the same, using taxpayer information posted on today’s popular social media outlets? Maybe.

But I don’t expect the agency to bring in a lot more money based on social media prompted tax investigations.

The main reason is that the IRS already is running on a tight budget. Many workers face furloughs if sequestration cuts continue.

And the IRS also recently caught congressional flack for making what some lawmakers saw as frivolous and money-wasting videos, ostensibly for training purposes, in its own in-house production studio.

So I suspect that diverting already thin resources to monitor social media sites won’t go over too well on Capitol Hill.

That said, remember that what you say on the worldwide web about your lifestyle could have consequences beyond just impressing your friends.


Want the latest news on taxes, tax reform prospects, filing deadlines, political fights, Internal Revenue Service alerts and tax-saving tips? Subscribe to Bankrate’s free Daily Tax Tip newsletter, our Weekly Tax Tip newsletter or, if you’re a true tax geek, both!

You also can follow me on Twitter @taxtweet.

Veteran contributing editor Kay Bell is the author of the book “The Truth About Paying Fewer Taxes” and a co-author of the e-book “Future Millionaires’ Guidebook.”