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Using Foursquare to Detect Tax Evasion / Money Laundering

diegobasch.com

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Re: Using Foursquare to Detect Tax Evasion / Money Laundering

#41

Post by rdtsc »

DanielBMarkham wrote: post #31
heretohelp wrote: post #28

Earlier quoted context omitted.

I had the same reaction, this stuff makes me queasy. I don't like tax cheats, but a tax cheat isn't going to imprison me for having the wrong opinions.

We have to remember that our set of laws was designed with a huge amount of slack. You can have a speed limit that nobody follows because hardly anybody gets caught. Once you start catching everybody, you've changed the social dynamic just by following the rules more strictly. This kind of thing is a huge deal. For decades politicians have spit-balled new laws that, even though passed, don't amount to squat because n…

There is a differentiation here that needs to be made. There is a problem if laws are so complicated and so strict and everyone ends up breaking them, the problem becomes a serious problem once the government has the ability to collect and record all times someone broke the law and then decide, later, for some possibly unrelated reason, to selectively enforce it.

Then a history of law breakage can be use for blackmail, threats, for silencing for coercing.

You are caught at an Occupy event and booked in. You are taken to the station and they pull up the fact that a speed camera caught you going 20 mph over speed limit. "5 years ago, it looks like IRS detected a tax discrepancy in your reporting, it would be a shame if they started an audit...maybe you should stop being involved in this movement", stuff like that.

I would almost more surprised if it won't happen sometime in the near future than if it does happen.

Re: Using Foursquare to Detect Tax Evasion / Money Laundering

#42

Post by lpolovets »

rdtsc wrote: post #33
DanielBMarkham wrote: post #19

You can slice this the other way also: using check-ins for a particular person to track where they visit. If their reported income is low, yet they check-in regularly at expensive restaurants and travel the globe, you've probably got a tax cheat in there somewhere or another. Seriously, I have no idea why we discuss some of this stuff. It only serves to give ammo for other people to monitor and control us in ways the…

I can see IRS building a fun little crawler. They already know everyone's name, address, place of employment, age, marital status, salary, the church they donate to. It would be interesting (and scary) to try to identify potential auditing target based on these check-ins and other stuff (from say, Facebook posts, twitter).

The tricky thing here, IMO, is that spending is based on assets + income, not just income. If I inherited $3m, make $50k/year, and spend $100k/year, it doesn't mean I'm lying about the $50k, it might just mean I have enough savings to live beyond what my income suggests.

Re: Using Foursquare to Detect Tax Evasion / Money Laundering

#43

Post by mark242 »

diego wrote: post #29
mark242 wrote: post #20

Earlier quoted context omitted.

OMFG Starbucks reported $3B in revenue this past quarter, but this store only has 10k checkins! Send in the G-Men, they must be laundering money! Come on, seriously.

That's nonsense. There are 20k Starbucks in the world, this is one. http://en.wikipedia.org/wiki/Starbucks

Congratulations on completely missing my point.

You say that this could be yet another datapoint for the IRS to collect taxes with.

The example you use has the number of Foursquare (and I'm sure Facebook) checkins within the statistical amount of noise for the actual number of people who visit the venue.

The example you give in this thread is a corporation who undoubtably has a team of dozens if not hundreds of tax attorneys on staff to ensure that the company pays exactly the amount of tax they owe, at the federal state and local levels, and not one cent more or less.

But let's take it a step further, and say that Joe's Ajax Factory in East Blogentry, California is skimming off the register. Okay-- so now you need some city clerk in East Blogentry to run this magical data analysis software which says Joe isn't putting enough into the city coffers?

Again-- this is a laughable idea. Even if the software were completely accurate (which is impossible) and admissible for a local tax audit (which it wouldn't be), and the amount of local taxes that you recouped were more than the TCO of this software (which it wouldn't be), you're assuming that the unscrupulous store owner (undoubtably laundering money a la Office Space) would just sit back and take it?

Re: Using Foursquare to Detect Tax Evasion / Money Laundering

#44

Post by DanielBMarkham »

rdtsc wrote: post #41
DanielBMarkham wrote: post #31

Earlier quoted context omitted.

We have to remember that our set of laws was designed with a huge amount of slack. You can have a speed limit that nobody follows because hardly anybody gets caught. Once you start catching everybody, you've changed the social dynamic just by following the rules more strictly. This kind of thing is a huge deal. For decades politicians have spit-balled new laws that, even though passed, don't amount to squat because n…

There is a differentiation here that needs to be made. There is a problem if laws are so complicated and so strict and everyone ends up breaking them, the problem becomes a serious problem once the government has the ability to collect and record all times someone broke the law and then decide, later, for some possibly unrelated reason, to selectively enforce it. Then a history of law breakage can be use for blackmai…

Yes. What'll happen is that since there is a practical limit on the number of people the government can put in prison, they'll just "defer" huge amounts of crime for people as long as they stay on good behavior.

Then, when the government chooses, they'll let the entire bomb drop on the guy. Of course there's also the blackmail and coercion potential (Looking at these traffic and land-use violations, you really don't want to criticize the governor in that way, do you?) It used to be that whichever party won the White House, the next year all the NGOs that supported the other party would be due for a tax audit. This increases that kind of thing by several orders of magnitude.

We voted for politicians who made promises and changes based on an existing manual system. All of those hundreds of years of voting and changing were inside of a system that doesn't exist any more. The feedback loop of the democracy was based on real humans going out there and enforcing the laws against real other humans, not the idea that whatever was said would automatically magically happen. Tom Smith in 1880 could get elected mayor on a platform of prohibiting spitting on the sidewalk because we all knew Tom, and we all knew that the entire purpose of the law was Joe, proliferate sidewalk spitter. Nobody cared about that law because once Tom got elected, he made Joe stop spitting and that was that. And who cared if it stayed on the books for the next 130 years?

But the world where laws were made by people, for people, to be enforced against people doesn't exist any more. Now we have technology that can take pictures all day long of people spitting, do facial recognition, and add it to a little file somewhere.

It's almost like we need to completely start over. We've built a machine that never could work, so it has all these patches and over-engineered pieces. Now that we're actually getting it to work, it'll eat us alive.

Re: Using Foursquare to Detect Tax Evasion / Money Laundering

#45

Post by ChuckMcM »

larrys wrote: post #25
ChuckMcM wrote: post #15

Earlier quoted context omitted.

You would be wrong in that assumption. Some businesses don't like paying the additional fees charged by banks when you use a credit card, they can be up to 8.5% according to a friend of mine that runs a locksmith. He would rather give 8.5% more service to the folks who come in the door. He has an ATM on site that will let you get a cash advance on your credit card if all you brought was plastic. It has a $3 transacti…

Fees are nowhere 8.5% I've never heard that and have had a merchant account since the 80's at several businesses. Not taking credit cards will cost you business in a retail location.

He's showed me bank statements, things like 'points' and 'cashback' and other 'features' of the card all seem to come back to the merchant as deductions against the amount billed vs the amount payed. He summed up the total billed (what he charged at the register) and the total deposited, and computed the difference, that difference was 8.5% rounded to the first decimal place.

Re: Using Foursquare to Detect Tax Evasion / Money Laundering

#46

Post by larrys »

jonknee wrote: post #39
larrys wrote: post #25

Earlier quoted context omitted.

Fees are nowhere 8.5% I've never heard that and have had a merchant account since the 80's at several businesses. Not taking credit cards will cost you business in a retail location.

It depends on your transaction amount, the fees can easily exceed 8.5%. When I had no change the other day and paid 45 cents at a parking station with a credit card I can guarantee the fees were more than 8.5%.

We're talking about merchant fees here. Not what a credit card user pays etc.

Re: Using Foursquare to Detect Tax Evasion / Money Laundering

#47

Post by harshreality »

rdtsc wrote: post #41
DanielBMarkham wrote: post #31

Earlier quoted context omitted.

We have to remember that our set of laws was designed with a huge amount of slack. You can have a speed limit that nobody follows because hardly anybody gets caught. Once you start catching everybody, you've changed the social dynamic just by following the rules more strictly. This kind of thing is a huge deal. For decades politicians have spit-balled new laws that, even though passed, don't amount to squat because n…

There is a differentiation here that needs to be made. There is a problem if laws are so complicated and so strict and everyone ends up breaking them, the problem becomes a serious problem once the government has the ability to collect and record all times someone broke the law and then decide, later, for some possibly unrelated reason, to selectively enforce it. Then a history of law breakage can be use for blackmai…

This trend is extremely dangerous. I could not agree more.

There's the massive intelligence collection and physical detection effort against terrorists.

There's been a more constrained system of criminal and criminal activity detection and correlation using GPS tracking, phone surveillance, drones, license plate recognition, and data mining of government and commercial databases.

The two are merging. Soon, everyone will be terrified of free speech and free association. Speech may still be free, but the government can always find some law you're violating.

As Breyer noted in his dissent in favor of granting cert in Rubin v. United States [1], "the complexity of modern federal criminal law... make it difficult for anyone to know in advance just when a particular set of statements might later appear... to be relevant to some such investigation." Even if you're guilty of no crimes and you have good lawyers, is participating in some political activity worth getting charged and brought to court?

[1] http://www.law.cornell.edu/supct/html/98-93.ZD.html

Re: Using Foursquare to Detect Tax Evasion / Money Laundering

#48

Post by larrys »

ChuckMcM wrote: post #45
larrys wrote: post #25

Earlier quoted context omitted.

Fees are nowhere 8.5% I've never heard that and have had a merchant account since the 80's at several businesses. Not taking credit cards will cost you business in a retail location.

He's showed me bank statements, things like 'points' and 'cashback' and other 'features' of the card all seem to come back to the merchant as deductions against the amount billed vs the amount payed. He summed up the total billed (what he charged at the register) and the total deposited, and computed the difference, that difference was 8.5% rounded to the first decimal place.

Sure if he's doing small transactions but in general you shouldn't be allowing people to use a credit card to make a $2 purchase, right?

What is defined (in this thread) as "most cash businesses" would be to me businesses that would typically allow someone to pay with a credit card.

That wouldn't be a local bodega allowing some to pay for a pack of gum with a credit card. It would be a business allowing cc use in a typical case where the per transaction charge is not significant and you don't stand to loose business because you don't accept credit cards.

Examples:

You run a restaurant and your average ticket is $45. If you don't accept cc's you will generally loose business.

You run an ice cream stand and your average ticket is $5. Less expectation of being able to (or needing) to use a cc for a small transaction like that. Chance of loosing business: significantly less.

Re: Using Foursquare to Detect Tax Evasion / Money Laundering

#49

Post by jack-r-abbit »

diego wrote: post #16
mark242 wrote: post #11

The example to date is the Eiffel Tower, with 36429 checkins over the 3 years of Foursquare's existence. Approximately 6.8 million people visit the Eiffel Tower each year. It doesn't take a math major to realize that this is a laughable idea.

Probably the majority of those check-ins happened in the past year. Also, look at a Starbucks near where I live: https://developer.foursquare.com/docs/explore#req=venues/49f... Over 10k check-ins, and I doubt it has 2 million visitors per year. Please elaborate on why you believe this is a laughable idea just from a numerical standpoint.

Have you ever checked into a business because you were there even if you did not buy anything? Have you ever gone to a business and not checked in even though you were buying something? I have done both. The number of people that check-in at a business has absolutely nothing to do with the amount of sales that business is on the hook to pay taxes for. One person might check in to Starbucks every morning as they purchase $50 worth of coffee and pasteries for their office. Another person might check in every morning when they buy their $2 double shot. Another person may go every morning yet check in only from time to time. There is no way this could be calculated to the accuracy that (dear god I hope) the IRS is held to.

Re: Using Foursquare to Detect Tax Evasion / Money Laundering

#50

Post by ChuckMcM »

larrys wrote: post #25
ChuckMcM wrote: post #15

Earlier quoted context omitted.

You would be wrong in that assumption. Some businesses don't like paying the additional fees charged by banks when you use a credit card, they can be up to 8.5% according to a friend of mine that runs a locksmith. He would rather give 8.5% more service to the folks who come in the door. He has an ATM on site that will let you get a cash advance on your credit card if all you brought was plastic. It has a $3 transacti…

Fees are nowhere 8.5% I've never heard that and have had a merchant account since the 80's at several businesses. Not taking credit cards will cost you business in a retail location.

On a related note, Fumiko Hayashi [1] has done a lot of research on the fee structures (much under the question of how one would regulate them and what constitutes an out of balance fee structure) but her papers are pretty accessible.

[1] http://www.kansascityfed.org/speechbio/hayashi.cfm

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