The Taxman's Web Spider Cometh

Juha-Matti Laurio writes "A five-nation tax enforcement cartel has been quietly cracking down on suspected Internet tax cheats, using a sophisticated Web-crawling program to monitor transactions on auction sites and to track operators of online shops, poker, and porn sites. Austria, Denmark, Great Britain, and Canada have joined The Netherlands in pursuing the 'Xenon' program with the assistance of an Amsterdam-based data mining company. Wired News reports that the Web crawler uses so-called 'slow search' to avoid creating excessive traffic on a site or drawing attention in the sites' server logs." The article notes that the US IRS will neither confirm nor deny using similar technology.

Comments

Re: the tax man cometh

[rustalot42684]

I guess this is further evidence that there are two things one cannot escape - death and taxes.

How's this work then?

[grassy_knoll]

From TFA:

The spider can also be configured and trained to look at particular economic niches -- a useful feature for compiling lists of business in industries that traditionally have high rates of non-filing. "For instance, weight control (yields) 85,000 hits, some for products ... also services," says Sweden's Hardyson.

Once the web pages are screen-scraped, Xenon's Identity Information Extraction Module interfaces with national databases containing information like street and city names. It uses that data to automatically identify mailing addresses and other identity information present on the websites it has crawled, which it puts into a database that can be matched in bulk with national tax records.

So the spider scrapes a publically available site for the business or shipping address, adds that to a database and then someone at a later point checks to see if there's an income tax form from that address.

Wouldn't that generate false positives if the billing address is, say, a post office box while the corporate tax forms are filed from the home office?

Re:How's this work then?

[Anonymous Coward]

Look to Europe for a "solution" to that: Every website by or for Germans that isn't strictly private is required by law to link to an imprint from every page. Non-private includes every site with a banner ad, every site with regular editorial content and of course every for-profit site. So far this has been very profitable for lawyers who send costly cease and desist letters on behalf of competing businesses to site owners who don't follow that rule. Besides, most websites already identify their owner via the domain name Whois records...

I for one ...

[mrvan]

I for one welcome our new octopedic taxiverous overlords

Re:I for one ...

[macadamia_harold]

I for one welcome our new octopedic taxiverous overlords

What do you mean "new"?

simple security measure?

[Travoltus]

Require logins in order to see addresses or any other identifying info. You have to do that to purchase anything anyway, on a typical site like that.

If the web spider doesn't have a login name, it can't see any identifying info.

I don't get it

[Perseid]

Mr. Spider sees an eBay store named Bob's Cat Toys. How do they know who Bob's Cat Toys actually is without issuing subpoenas? The address isn't necessarily listed anywhere until you buy something.

Re: the tax man cometh

[Snarfangel]

I guess this is further evidence that there are two things one cannot escape - death and taxes.

Yeah, but death only comes for you once.

Interesting.

[JKConsult]

I'd be curious to see how exactly they propose to spider a gambling site. Unless you've won so much money that your name is posted on the webpage (like the winner of the Sunday Million on PokerStars), I can't really see how this is going to work. And yes, I've RTFA.

In the abstract, I'm not against it. Tax cheats are tax cheats. Now, I don't claim my online poker winnings, but that's because they amount to such a piddlingly small sum each year that it really isn't worth my time. If I were to get audited, I'm sure I'd get busted, as the winnings deposit into my bank account, and should count as income. How they go about doing it is the key. If they just use publicly available information such as the aforementioned posting on the webpage, then fine. If you're dumb enough to win that kind of money and think you're getting away with not paying taxes, then you deserve what you get.

Re:Interesting.

[Fezmid]

Woah, I just saw a big spider walk by, read your post, make some marks in a notebook, and then walk away! Freaky!

Re:Interesting.

[iminplaya]

Now, I don't claim my online poker winnings...If you're dumb enough to win that kind of money and think you're getting away with not paying taxes, then you deserve what you get.

Yeah, baby! Right on! Hey, buddy. The amount don't matta. Just like Christmas, it's the thought that counts. Cheating is cheating. Fascinating bit of "logic" you got there. I have a teeny, tiny problem with people who think that a "little" cheating is ok, and that anybody who cheats more than they do is a filthy crook.

Tax cheats are tax cheats.

You think?

Re:Interesting.

[pla]

In the abstract, I'm not against it. Tax cheats are tax cheats.

Why? Why do people so readily accept the idea of "death and taxes"???

If our taxes actually went to reasonable uses, I'd agree with you. Infrastructure improvement, national -de-fense, international negotiation.

But no, instead we pay (in the US, at least) a third of our income toward fuck-all. I work so a quarter of the population who could work can sit at home and munch cheetos all day watching soaps. I work so some starving artist doesn't starve. I work so unappreciative kids can get their socialized babysitting and social indoctrination. I work so our oligarchy can squeeze their kids through low-GPA MBAs and perpetuate the lines of power. I work so we can kill arabs who inconveniently live too near "our" oil.



I can think of few more noble crimes than "tax cheat".

Re:Interesting.

[JKConsult]

The amount don't matta.

I knew I should have made myself more clear. Yes, I am cheating on my taxes. And yes, it's "just as bad" (I don't really think it is, and neither do you, because volume does matter, but we're both accepting this as part of the argument) as someone who sets up shady tax shelters to save billions.

What I was saying is that I win about $100 every year playing online poker. Yes, I could go to all the trouble of trying to get some sort of documentation, add it to my income, and pay the taxes. Or, I could pocket the $30 and forget about it. I do the latter. As I said, if busted, I would freely admit to it, and would accept the punishment, as I realize that I am cheating on my taxes.

There is a logic to my position. Part of the FASB (Financial Accounting Standards Board) standards include the concept of "cost-benefit" and "relevance" to reporting financials. The first may not apply here, as it basically states that if the cost of gaining the information (depreciating, say, light bulbs) outweighs the benefits of the users of the filings having it, then you don't need to worry. The second does matter. It basically states that (as opposed to something large, like property or equipment), if you're IBM and you buy a $5,000 desk for someone, they could give a flip whether you expense it or depreciate it. Because it doesn't matter. I consider my $100 winnings online versus my salary and go with the latter option, that it's so small as to be irrelevant. If the IRS disagrees, then I'm willing to pay the piper.

Re:Interesting.

[iminplaya]

That's not what I'm talking about. My point is that I'll declare what's required. I won't try to hide anything. He thinks he's getting away with something, and that it's ok because it's "just a little". So you're kind of off base here. And my second cousin-twice removed, who works at the DMV in Kansas City and has a neighbor whose mother-in-law works in the Pentagon says I'm NOT stupid!

Re:Interesting.

[Fulcrum of Evil]

Killing ten people is as bad as killing a million.

What about cutting them off in traffic? Is that as bad as killing them? That's what this is.

Re:Interesting.

[UnknownSoldier]

> Is the IRS going to spend $300 on an auditor to collect $30 of taxes? Think about it.

This is the government we're talking about...

get mining

[Anonymous Coward]

The software in question is called DataDetective (win32)
http://www.sentient.nl/

parent company
http://www.smr.nl/

details are sketchy

[PhantomHarlock]

After reading the article I'm still not sure exactly how it works. How do they know who is behind the particular auction ID? Do they have access to the auction houses' databases? It appears to only use whatever information is online.

Does it also use whois information for domains? Not sure what htey are doing to correlate information. Need more details!

--M

Re: the tax man cometh

[kfg]

Yeah, but death only comes for you once.

Well can you tell him that? I don't mind the company, per se, when spends some time sitting at the foot of my bed, but I could do without the anticipatory gleam in his eye. It's very disconcerting.

I think he's hoping that a bit of insomnia might just push me over the edge.

KFG

In the UK

[joe 155]

it is worth noting that (in the UK) the tax men don't need to be able to prove anything has actually been done wrong in order to follow up with an investigation - at which point you have to prove that you are innocent rather than them having to prove guilt. They can ask for your tax returns and bank info etc. for the last 10 years, if you don't have it its because you're committing tax fraud... I guess this might just be able to point them in the right direction rather than doing all the work, so even with just a name it might be enough...

I just hope I don't have the same name as someone whose on the make

Another idea, too

[Travoltus]

If the IP address is from a known list of Government sites or any known spiders, redirect them to pages free of personal information.

This would also be useful in keeping spiders armed with manually-created website logins from slurping down tons of personal information for private databases... oh crap, I'm giving them ideas!

Standards ?

[billcopc]

Now then, shall they honor robots.txt ?

User-agent: TaxSpider
Disallow: /

But really all this means is you can file a tiny tax report for your auction/poker/porn business and get away with it, as long as you file something. How will this spider tell them whether I made 20'000 or half a million from online business ? It won't. If their method of finding tax evaders depends on published HTML, I think they're screwed from the get-go. What if the address isn't in text form, but rendered to an image, overlaid on fancy graphics ? They should be obtaining records from whatever payment intermediary is involved whether it's a bank, Paypal, or a 3rd-party credit card processor. Just having any tax report from a given address is not proof that all income was truthfully disclosed.

At the end of the day, it's still a wasted fight. States argue over where taxes should be levied. Sender or receiver ? Or maybe it should be in the state where the web site is hosted. It's all just a bunch of bureaucrats trying to claim something they had no part in. My logic is that if there is no physical involvement, there should be no taxation. Playing poker online doesn't incur any costs to the city where I live; it doesn't make use of its roads and municipal services, it doesn't burden the healthcare system with injuries or violence (e.g. bars). In fact, whether I play for fun, or wager real money has no effect on anyone but the players and the "house". This obsession with taxing everything is a fallacious concept that underscores the root issue: government is sloppy with its resources. They make up these schemes to swindle always more money from the citizens, only to piss it away. Government is supposed to act on BEHALF of the citizens, in their best interests. If government were run like a regular business, with real risks, goals and accountability, it would fail overnight. It is failing right as we speak, as we witness more and more people moving away to lower-taxed nations. When the cost of government exceeds the value of its services, those who can, leave.

Even Better

[earthforce_1]

If you detect the spider, you could quietly redirect them to a honeypot full of bogus personal data and useless links to crap their database and make them waste time sifting through plausible but useless data. The generated "customer" names and addresses can even be real, just combine random first and last names plugged into http://findaperson.canada411.ca/ and add the returned names and addresses to your customer database. Voila!

( I was recently screwed by the taxman despite making rigorous efforts to adhere to their byzantine rules, so I have no longer have any moral qualms about helping others fight them )

Re:The funding for this program

[Handover Phist]

Yeah, but after taxes death is just a tired feeling...

Re:The Federal income tax is unconstitutional

[Anonymous Coward]

Or, of course, you could realize that Russo is playing word games. And not really good ones at that.

This FAQ explains why Russo's logic breaks down.

Re: the tax man cometh

[KUHurdler]

I avoid the whole taxing problem by simply not making any money...

IRS Regression

[Hortense Yaya]

This sounds like it is, or would be, a step backward for the IRS. Computer programs are not as singleminded or unyielding as IRS agents.

Re: the tax man cometh

[ne0n]

I guess this is further evidence that there are two things one cannot escape - death and taxes.

Yeah, but death only comes for you once.

 
Not if your name is Rincewind :)

What the article doesn't tell you...

[GuyFawkes]

Articles like this are a lot like the television licence (http://www.tvlicensing.co.uk/) or road fund licence (http://www.dvla.gov.uk/) FUD, (incidentally if you google "road fund licence" the increasingly irrelevant google search will give ebay as an option...) which goes along the lines of local ad campaigns saying "we know there are 14 houses in Letsby Avenue with no TV licence" cos their database says so, I don't have a TV, but the presumption is that everyone does have a TV, and anyone who doesn't is a liar and a licence fee dodger.

In the Uk as far back as 1980, so before everything except mainframes in any meaningful sense, Banks were obliged to notify the tax man of any ammounts you had if balances or individual transfers were over 300 pounds.

While these articles are FUD "we know what you are doing on e-bay, so pay up before we nail you", which will collect some people along the way, the reality is the system as advertised cannot work, my ebay handle is not my name, my ebay address is my mothers house (when I signed up for ebay I was moving, just not sure where, and have never bothered updating) and most of my transactions have been in cash, and I have bought and sold expensive capital items like vehicles on ebay.

Far Far Far easier to simply crawl ebay for completed sales, total amounts, large capital items, and then match these amounts and dates to bank accounts, aha, ebay user "taxfreetrader" is Joe Bloggs.

Of course a huge number of transactions are paid via paypal, so there is an electronic record with an even better method of searching and matching.

People who regularly deposit 1000 bucks and over for single items may get busted, people who regularly transfer 1000 bucks and over from paypal may get busted, people who believe this crap will turn themselves in, everyone else who is smart and deals in cash or equivalents such as Postal Orders will not get busted, except perhaps second hand from the person you sold to or bought from getting busted, and them grassing you up.

The other things they are looking for that this can help to detect is VAT (http://www.direct.gov.uk/en/MoneyTaxAndBenefits/T axes/BeginnersGuideToTax/) carousel fraud (http://www.statistics.gov.uk/articles/economic_tr ends/ETAug03Ruffles.pdf)

The average guy on the street like me with 150 feedback spread over 3 years has fuck all to worry about.