May 3, 2013
By: Kelly Diamond, Publisher
Technology is the new weapon of choice when it comes to surveillance, especially for the IRS!
The double standard imposed on the general public has reached almost embarrassing levels: 100% transparency from private individuals, a pass for corporate cronies, and NO expectation of transparency or accountability from the likes of the IRS.
Lately it seems the various federal agencies are engaged in some sick competition to see who can creep the deepest into the lives of the average American, and remain there unnoticed the longest. The DHS seems to have access to quite a few advantages, but with the exception of drones, those tools are rather conspicuous. The FBI has managed to circumvent a few laws while receiving help from sister agencies like the CBP (Customs & Border Protection Agency). I don’t think I’ve seen a more pro-active or tenacious agency than the IRS. These guys will look at you like a flat-earther if you say something like, “You can’t bleed a stone.” Sure you can! And they do just that.
The IRS has been quite busy instituting technological advancements to better track down tax evaders. They mean to close the supposed “$300 billion” gap in unpaid taxes. (That number is totally arbitrary and has absolutely no factual basis whatsoever; but it’s the number the IRS uses, which also happens to be alarmist enough to get the ire of every single class warrior up to hunt down those selfish, greedy bastards!)
A little over a month ago, we saw folks getting excited over the prospect of BitCoin becoming a legitimate or recognized currency. By now, it should be clear that such a status comes with great scrutiny. If you look at the federal government as a three-headed beast, as I do, then the ideal situation isn’t for it to sniff and find out you are in the room with it. The ideal situation is to exist in that room undetected. BitCoin was getting away with that for quite some time, until folks in economically tumultuous countries began turning to it for stability or, if nothing else, a store of wealth. Alternative and virtual currencies out-grew their status as being nothing more than computer funny-money.
Back in March, I discussed this very thing: how the Financial Crime Enforcement Network (FinCEN), an arm of the Treasury Department, has some “guidance” for BitCoin points of exchange. FinCEN is concerned more with money laundering… but the bookkeeping and paperwork their “guidance” requires offers a LOT to entities like the IRS, who want to know who is trying to dodge the establishment’s currency structure.
The FinCEN’s “guidance” is no more clear than it was over a month ago, other than the demands put upon those who mine or exchange BitCoin: to register as Money Services Businesses (MSBs) in compliance with anti-money laundering efforts. What they are specifically looking for or how they plan to go about it – those things remain unknown. But, the IRS will likely piggy back on whatever strides FinCEN makes in their efforts to monitor the use of alternative and virtual currencies.
Our government feels entitled to a cut of ANY commerce conducted by an American citizen. That means, you could barter your bracelet for hair-braiding in Thailand, and TECHNICALLY you are meant to report that trade! The “fair market value” of your bracelet and the braids is TAXABLE INCOME! Not only does the US like to tax its citizenry when they earn in other countries, but they want a liquid portion of any NON-CURRENCY exchanges as well. By this strict measure, pretty much everyone who moved, solicited the help of friends in exchange for pizza and a six pack of beer, and DIDN’T report it to the IRS is guilty of tax evasion.
These are the actual rules. Do people follow them? Absolutely NOT! Especially the statists who think taxes are a virtue! Honestly, I didn’t know that the US seeks a cut of the incomes of Americans who work and earn outside the US borders until recently. But I also didn’t realize that a simple barter also was taxable until the other week. This proves that at any given time, an average non-violent American can, in fact, be in violation of at least one or two laws, and never know it.
The IRS isn’t stopping at BitCoin, though. By golly they want the offshore accounts! The assumption being that if you have an offshore account, you are clearly evading American tax obligations and are therefore a crook. So, they went ALL OUT. First, they appealed to countries directly. Then they appealed to private citizens by baiting the hook with an “amnesty program”. Once they received cooperation from Israel’s Bank Leumi, however, many of the eligibility letters for this program were reneged upon.
Now they are just going straight to the federal courts to seek out a “John Doe Summons”. The nebulous – and let’s face it, DUBIOUS – practices of the federal agencies are in full flare. It used to be you needed a name for a warrant, or at the very least the name given to you. Yeah, they don’t know who they are looking for, but they will let you know when they find them. HUH?! (Excuse me while I totally ignore any distinction being made between a “summons” and a “warrant” here.)
This is like the sobriety checkpoints: all they need as probable cause is you being there. Or the border checkpoints: driving evidently is suspicious enough to warrant a search of your car and detention. Now, apparently, if someone has an account that corresponds to an offshore account, that’s enough to get a “John Doe Summons”. A correspondent account is established by banks that do not have a location in the United States, but wish to do business in US dollars… business that involves financial transactions such as deposits, withdrawals and transfer of funds. So the IRS isn’t looking for anyone in particular, only to receive a list of particular names from these banks.
Thus far, such a summons has been issued to Wells Fargo – as it has correspondent accounts with Canadian Imperial Bank of Commerce and First Caribbean International Bank – as well as UBS AG, who has correspondent account records with Swiss bank Wegelin & Co.’s. It’s sad to see the Swiss banks being so complicit in their dealings with the IRS, although I don’t know all the strong-arming involved which elicited their cooperation in the first place.
This next initiative makes the others look like small potatoes, because if it were any private individual engaging in such activity, you’d be seeking a restraining order and trying to enter a witness protection program in Djibouti. This is going to sound like a plot line from some science fiction novel, but let these two words circulate: economic DNA. The mere concept freaks me out. If you look at your annual tax return, you see your own spending and income patterns… but they are rather general. You have the W4 for your steady income job, you have the mortgage, kids and student loan deductions, married or single… It’s probably not that different from anyone else.
The IRS got it into its crazy head that there must be more to your life than that. In fact, it’s rather sure of it. And to prove it, they decided to secretly invest in some new technologies. Tax preparers and attorneys aren’t even really sure on the particulars, which is always nice. I mean, who has time for the details anymore? When it comes to regulating SEC businesses, rules perform some vanishing act. When it comes to holding entities like FinCEN or the IRS to account, the explanations are at best vague… assuming you can get anyone to even go on the record about it in the first place! But DAMN! Some poor little schlep wants to trade beer for a help moving, or buy a box of candy with BitCoin, and the IRS is up their asses faster than a dog in heat!
The IRS is already engaging in warrantless searches of people’s virtual communications. But they now have a program (and you’ll have to pardon my ignorance when it comes to the proper technical terms here) that functions a lot like “cookies”. Cookies are a little annoying in that advertisers learn about your interests and haunt you with their ads while you surf the internet. Marketers might see that I like to bake and someone will flash an ad for chocolate chips at me. Okay, well take that capability and add on access to Social Security numbers, health records, credit card transactions and many other privileged forms of information and you have the IRS version of “cookies”.
Among many other things, the information gathered from your social networking and purchasing activity cross-analyzed with your tax return could raise a few flags. For example, you could have a business trip to New York, which you plan to expense. But on your Facebook page, you talk about how you are going to visit with some friends in New York. The IRS sees this and says, “Hey! You said it was business!” Because while cunning and conniving, they lack the sense of a common house fly in that you could very well do BOTH. Nonetheless, expect the audit and scrutiny.
What of this “economic DNA”? One of the other capabilities afforded to them through this new monitoring technology is “sorting data in 32,000 categories of metadata and 1 million unique ‘attributes’”. The processing power the IRS now has is such that in a matter of hours, the economic profile of any individual can be derived, heaven help you if you deviate from it later!
Still, there are no real oversight or checks in place for this sort of invasive activity. Every now and again, the IRS gets a little reprimand, telling them they’ve overstepped their bounds, but never anything to restrict their meddlesome plotting… in fact, at best, I’d say they just redirect them. The Warshak verdict determined that warrantless searches of emails was unlawful. The IRS didn’t really stop the practice, though. Earlier this year, a new set of tax guidelines were tossed out by a federal court on the grounds that the IRS was going too far. But no real penalties or consequences for them, and don’t expect that to change. As it turns out, they want to keep their tactics close to the vest, lest those “tax cheats” figure things out and continue to evade their obligation to pay tribute!
I pointed out similar problems with the use of surveillance drones: no accountability and reckless intrusions on our civil liberties and privacy. It seems like our government is on a permanent dragon hunt. This elusive being has no name… yet; and its whereabouts are not known… yet; and what laws it has broken are still unknown… for now; and what danger is poses to the general public may never really be known. Look at the lengths the government is willing to go just to track down a 19 year old boy! 9,000 SWAT team members armed to the gills driving HUM-Vs down the streets of a residential neighborhood. Look at the lengths they go to just to track down this shadow enemy known as “terrorists”. Thousands of innocents dead, soldiers committing suicide at alarming rates, and occupation of other countries. Look at the violence and money involved in hunting down people who grow and sell plants! Nearly $14 BILLION just THIS YEAR, along with countless mistaken raids that result in terrorizing individuals, killing dogs, and sometimes even killing elderly individuals. Now look at the measures they will take to collect on your economic activity. It can’t be cost effective. But it’s not about that, really, is it? It’s about reminding you that at any given time, they can find you and get you for something.