Giddy IRS Launches AI-Enabled 'Sweeping, Historic' Tax Violator Crackdown
Flush with money and new staff, the Internal Revenue Service says it is kicking off what it bills as “a sweeping, historic effort to restore fairness in tax compliance.”
In a news release on the IRS website, the agency said it is “shifting more attention onto high-income earners, partnerships, large corporations and promoters abusing the nation’s tax laws.”
The IRS was able to beef up due to an $80 billion infusion that was part of last year’s Inflation Reduction Act.
At the time, reports indicated that the money could be used to hire 87,000 people, a number that continues to be bandied about when discussing the agency’s expansion plans, according to Forbes.
Reuters reported in the spring that the IRS planned to hire about 20,000 new workers.
The IRS now boasts nearly 90,000 full-time employees, according to The New York Times. Last year, the agency totaled 79,070 full-time workers. The last time it had more than 90,000 employees was 2012.
The $80 billion was sliced by about $20 billion as part of the debt ceiling negotiations this spring, according to the Times. That remains a bone of contention during the current squabbles in Congress over the fiscal 2024 federal budget. The agreement, to which House Speaker Kevin McCarthy agreed, has since been denounced by some conservative Republicans.
In touting its plans for tougher enforcement, the IRS said it would use “improved technology as well as Artificial Intelligence that will help IRS compliance teams better detect tax cheating, identify emerging compliance threats and improve case selection tools to avoid burdening taxpayers with needless ‘no-change’ audits.”
Part of the IRS plan to collect more cash was what it called the “High Wealth, High Balance Due Taxpayer Field Initiative.” The effort will target taxpayers with income above $1 million who owe more than $250,000 in taxes, according to the agency’s news release.
“The IRS is working to expand this effort, contacting about 1,600 taxpayers in this category that owe hundreds of millions of dollars in taxes,” the IRS said.
The IRS said it would use artificial intelligence to target the largest partnerships.
“These are complex cases for IRS teams to unpack,” IRS Commissioner Daniel Werfel said, according to The New York Times.
“The IRS has simply not had enough resources or staffing to address partnerships; in a real sense, we’ve been overwhelmed in this area for years,” he said.
The agency release said the partnership probe will focus on “75 of the nation’s largest partnerships, which were identified with the help of artificial intelligence, by the end of the month. The partnerships all have more than $10 billion in assets and will receive audit notices in the coming weeks.”
Next month, the IRS will send what it calls compliance alerts to about 500 other large partnerships, claiming the IRS found discrepancies that could turn into audits.
Grover Norquist, founder and president of Americans for Tax Reform, said he’s not sold on the AI claims, according to the Times.
“This is one more way for them to put some distance in their decision-making,” Norquist said. “They can say, ‘Oh, we’re not auditing people we don’t like. This is science.’”
The IRS claimed that it would not increase audit rates for people earning less than $400,000 a year.
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