In recent years, a number of U.S. states and the federal Internal Revenue Service (IRS) have begun adopting an increasingly sophisticated array of tools to aid in the identification of companies that attempt to evade taxes or flout other regulatory requirements.
Several states, including Washington and Louisiana, have employed technology developed by software firm SAS. The company first developed the fraud-detection program in the 1990s to help banks discover accounting irregularities that suggested malfeasance.
After implementing SAS’s software, Washington officials increased their identification of companies not complying with the state’s workers’ compensation requirements by 65 percent. This allowed them to collect $18 million in premiums that would otherwise have gone unpaid. Los Angeles County has made effective use of the technology as well, specifically with regard to the detection of individuals illegally tapping into public welfare programs.
The IRS signed a contract with SAS to begin using the software in December 2011. Accounting Today reports that the IRS hopes to use the technology to close an estimated $345 billion gap between the amount of money that should be collected through taxation and the amount that is actually collected.
With state and federal agencies using these sophisticated new tools to catch companies that do not comply with their legal responsibilities, it is increasingly important for business leaders to take steps to ensure that their organizations are in full compliance with tax codes and other regulations.
Working with an internal audit consultant can help a company ensure that it does not have any outstanding liabilities that will lead to legal challenges or expensive penalties in the future.