Beware the Tax Man

  Business Intelligence   Strategy  

While the official filing date for our 2004 taxes are still several months away, many of us (including myself) have started early in search of our annual carat--the large refund. As it is every year, the tax code is filled with deductions, credits, deferrals etc.

Many of you out there are trying to squeeze every last dollar out of Uncle Sam and hope no one will notice when you take a $50 deduction for those old pair of half-chewed up socks that you threw into the bin at the Salvation Army. Really--what are your chances of getting audited? Most of us truly believe that we have a better chance of winning the lottery. While our federal government definitely has thinned out the ratio between auditor and auditee, filers should not see this as an opportunity to stretch those deductions to the edge of imagination.

The truth is that analytical tools, especially increasingly more sophisticated data mining tools, have reduced the need for real auditors. Most computers can now detect tax return anomalies with far more sophistication than human auditors. As computers have become more powerful, analytics more sophisticated, and data searching algorithms more efficient, the ability to detect fraud within taxes has become more effective.

Consider some of the opportunities that now exist with data mining tools. Utilizing neural network technology, the IRS…

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