States Use Debit Card Data in Sales Tax Audits

NY, NJ and Connecticut are leading in a massive State Government effort to attack retail businesses. They use the reports from debit and credit card sales mined from individual's data to attempt to match the sales shown on the business tax returns.

Reuters reports:

By checking customer data against retailer tax returns, wholesaler records and other sources, the state hopes to find retailers who either fail to collect or remit the sales taxes due.

New York has been "data mining" for more than 10 years to collect more information and tax from businesses and individuals. This intrusive attack is part of the State's desperate attempt to collect more tax. The article reports:


NEARLY A DECADE OF MINING DATA

New York's approach to mining data began in 2003 with a goal of improving tax return audits. In the near-decade since, its systems have saved the state more than $2 billion, of which $442 million came in during 2011, the Taxation Department said.

Over the years the systems have expanded to include fact-checking of withholdings information reported on income tax returns against that reported by employers, and helping the collections department focus on cases with the best chance of significant recovery for the state.

"New York has had a great success with this," said Michael Bryan, director of neighboring New Jersey's Division of Taxation.

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