Technology is rapidly changing the world and that includes the way we hail taxis. A decade ago hailing a cab could be challenging depending on location and the time of day. We had to stand in the street wildly flailing our arms if we were lucky enough to see a cab. No cabs in site? We would then search for a phone booth and a copy of the Yellow Pages.
Smartphones eliminated the need to find a phone book and allowed us to simply look up taxi companies from our phone.
And then came taxi apps that use GPS technology to locate the nearest taxi cab. Cabbies love them because it allows them to get more riders.
Well, it didn’t take long. Now the tax man has figured out they are a great way to combat tax evasion too.
Tax evasion? Yes!
It turns out that taxi drivers have a very low tax compliance rate. That’s because they deal in cash. (When I was Maine’s state revenue commissioner we had compliance problems with fisherman and wood cutters who frequently also worked for cash.)
An article in Globes, Israel’s business website, says the Israeli Tax Authority has nabbed “dozens’ of taxi drivers who evaded taxes. The Israelis obtained a court order to get records from Get Taxi, a popular taxi app. After randomly selecting 50 drivers for tax audits, the government found most had not reported all their fares. Some paid fines while others may be facing criminal charges. With 3000 drivers signed up for Get Taxi in Israel, we suspect the other 2950 will soon be facing tax audits too.
Says Moshe Asher, head of the Israel Tax Authority, “The Tax Authority is keeping its finger on the trigger and uses all technological means to make certain that all citizens and companies pay the true amount of tax and do not put the tax burden on law-abiding citizens.”
That sounds like something the IRS would say.
Cash businesses have long been a problem for the IRS and state revenue departments. Christmas tree sellers, bars, and sidewalk massage clinics all have tax compliance issues. Add taxi drivers to the list.
Although I have not heard of any tax audits in the United States involving Get Taxi or other similar apps, technology is often a “friend” to the tax man and a problem for taxpayers hoping to game the system. Mobile wallet apps, automobile black boxes, GPS units, toll trackers and other similar devices have been already been used in tax evasion prosecutions and tax audits.
The take away? If you are facing a tax audit or criminal investigation for tax evasion, don’t try to outsmart the IRS. Seek professional and experienced counsel immediately. Many taxpayers don’t know that making false statements to an IRS special agent or state investigator can be a crime itself.
For more information, contact attorney Brian Mahany at or by telephone at (414) 704-6731 (direct). Our experienced criminal tax attorneys have helped people nationwide. All inquiries are kept in strict confidence and protected by the attorney-client privilege.
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Tagged as: Tax Evasion, IRS Criminal Tax, IRS Tax Attorney, Tax Audit Defense