Ben Stein wrote an interesting editorial for Yahoo! Finance, "Big Brother and Your Taxes".
A friend of his called from California that the state tax authorities sent her a letter questioning how she could afford a car far more expensive than her income would indicate she could afford. She had had a car accident and received a lump sum insurance payment of around $30,000. She used that money as a down payment on a very expensive car.
Stein went on about how the servant has become the master. How did the state know which make of car she had bought and compare it to her income? What unfeeling processes are going on to flag such occurrences? Does the government know too much detail about us?
Without a big investigation into all the facts, we really don't know. A possible explanation is that someone who knew the woman reported her to the tax authorities and a human investigator started looking into the matter. We do know that the Federal government will pay part of the recovered taxes of deadbeats to those who give it leads. Maybe a jealous or suspicious neighbor reported this woman as cheating on her taxes.
