Among government agencies, the IRS likely has the surest legal claim to the most information about the most Americans: their hobbies, religious affiliations, reading activities, travel, and medical information are all potentially tax relevant. Privacy scholars have studied the arrival of Big Data, the internet-of-things, and the cooperation of private companies with the government in surveillance, but neither privacy nor tax scholars have considered how these technological advances should impact the U.S. tax system. As government agencies and private companies increasingly pursue what has been described as the “growing gush of data,” the use of these technologies in tax administration will become increasingly important to consider. This Article provides an agenda of items for discussion, debate, and research related to the development, implementation, and effects of a surveillance-facilitated tax system.Hatfield argues
Although the Internal Revenue Service (IRS) “has al ways been an information intensive agency,” its information- gathering has never been the focus of privacy scholars. Those scholars have instead focused on agencies such as the National Security Administration (NSA). But the IRS’s legal claim to private information is remarkable. It is entitled to collect information about who sleeps how often in your house, your hobbies, your reading preferences, your religious affiliation, your travel plans, your weight and your doctor’s recommendations about it, your spouse or your dependent’s abortion, sterilization, or gender identity disorder, and if you were considering a carnal quid pro quo when you made a gift to your “mistress.” Yet, privacy scholars have taken no note of the IRS’s extraordinary legal claim to such information.
From the reverse angle, despite the information-intensive aspects of tax law, tax scholars have not taken note of the increasing pervasiveness of information technology. Modern technologies are creating “minutely detailed records” of our existence, increasingly facilitating the “persistent, continuous and indiscriminate monitoring of our daily lives.” One information privacy scholar described the radical and technological transformation of personal information:
The small details that were once captured in dim memories or fading scraps of paper are now preserved forever in the digital minds of computers, vast databases with fertile fields of personal data . . . . Every day, rivulets of information stream into electronic brains to be sifted, sorted, rearranged, and combined in hundreds of different ways. Technology enables the preservation of the minutia of our everyday comings and goings, of our likes and dislikes, of who we are and what we are . . . . It is ever more possible to create an electronic collage that covers much of a person’s life—a life captured in records, a digital biography composed in the collective computer networks of the world.
A prominent national security advisor has predicted that by 2040, all of our daily activities will be known by "governmental" and corporate entities” pursuing the “growing gush of data” from the “internet of things.” As we move towards such a future, the IRS most likely will be among those entities pursuing this growing gush of data. This Article suggests an agenda for discussion among privacy and tax law scholars: issues we ought to consider, research we ought to pursue, and debates we ought to have.
In Part I of this Article, I describe the flow of tax-relevant information from taxpayers and third parties to the IRS. I point out two significant problems in that information flow: the compliance burden and the compliance gap. In Part II, I predict that, over the next twenty-five years, surveillance technologies will be used to reduce the compliance burden and gap. I consider the technological and political factors that may pave or block the way for such an increase in surveillance to improve tax administration. In Part III, I recommend a research agenda in an effort to make the integration of surveillance into tax administration more beneficial than harmful. Ultimately, reforming tax law to fit the emerging technology and our privacy expectations will be essential to integrating the information technology revolution into tax administration without disrupting the administration itself.