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IRS Turns to AI to Crack Down on Tax Evasion


We’ve heard of artificial intelligence in movies like Terminator and I, Robot. But the real applications of artificial intelligence include analyzing complex data sets, driving vehicles, providing more insightful user experiences, and even setting dinner plans or weeding out spam callers. While these applications have grown incredibly in the private sectors, government agencies like the IRS have also started to employ artificial intelligence as a utility for improving communication, taxpayer assistance, and even detecting tax evasion.


Several government tax agencies have already employed the use of chatbots to answer taxpayer questions. The most recent example comes in the form of Canada’s Charlie the Chatbot. A similar system is no doubt in the works for the IRS, which will hopefully help taxpayers avoid long wait times on the phone and get clarification on confusing documentation on the IRS website. Artificial intelligence has a consumer-facing goal of making lives easier, so it’s not far off to expect time-saving applications like chatbots.


While this appeals to taxpayers and consumers, the ideal application for an agency like the IRS is in tracking tax evasion, and increasing the likelihood of collecting tax payments from delinquent tax payers or non-filers. Such an application comes into the picture as the Internal Revenue Service ramps up data collection and analysis by using artificial intelligence to create graphs and present relationships between data to identify people who may be avoiding their taxes. But the usability goes as far as analyzing the scripts between IRS agents and taxpayers in order to find out how to effectively solicit tax payments, and ultimately “get a check sent.”


In an effort to fulfill these objectives, the IRS has even engaged in relationships with data firms to investigate potential tax evasion. IRS commissioner Charler Rettig even reveals the benefits of these new partnerships with this quote: “If I get a first name and a cell phone number, you’d be shocked how much information Palantir can provide.” Palantir refers to Palantir Technologies, a private data analytics company based in California. The initiatives are still fairly new and uncertain considering the budget of the IRS.


Additional implications come from the already detached nature of the organization becoming more automated, pushing human interaction even further from the taxpayer. Often, taxpayers are already confused as to the reason for IRS notifications, and making the communication process automated could become frustrating and ultimately leave taxpayers even more uninformed.


While the involvement of artificial intelligence in tax processes remains uncertain, human interaction will always be close by. Taxpayers should be wary of the fact that the evolution of technology within agencies like the IRS makes it much harder to conduct nefarious actions like tax evasion.


Talley’s experienced team of tax professionals provides comprehensive tax compliance and consulting services so you can preserve, enhance and pass on to the next generation the assets and wealth that you’ve worked hard to build. We welcome the opportunity to discuss with you the current opportunities available to you, your family and business. For more information, contact us today.

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