Question: The tax authorities working for many governments are often confronted with challenge of detecting tax evasion and fraud. Suppose you work at income tax department. All residents and businesses of the country earning income should file tax information electronically along with their tax payment.

- How could you use data mining concepts to help detect fraud?
- What kinds of fraud can you detect?
- Explicitly state your assumptions.
- Purely by data mining techniques, can you confirm that an individual has committed fraud? Provide reasons.