The Internal Revenue Service (IRS) is leveraging artificial intelligence (AI) to enhance its scrutiny on high-income earners, partnerships, and large corporations. As revealed in a recent report by Kohrman Jackson & Krantz LLP, this comes as the IRS increases its efforts to ensure compliance with federal tax law, indicating a significant turn in the way tax regulations are enforced.
The IRS’ increased fiscal attention towards these sections of the tax-paying populace results from additional funding obtained through the Inflation Reduction Act. More importantly, however, it is the increased capabilities conferred by AI that have ushered in this renewed emphasis on ensuring compliance.
The application of AI in tax enforcement is not new. However, its deployment at this scale by the IRS signifies an era where tech-driven solutions are increasingly becoming the norm in regulatory compliance. Not only can these AI tools streamline the IRS’ operations, but they also improve the accuracy and efficacy in identifying instances of non-compliance.
Legal professionals in corporate settings need to be particularly aware of this development. The advancements in AI mean that the IRS can more effectually scrutinise financial activities, which minimizes the field of error both for high-income individuals and entities under their jurisdiction. Therefore, reinforcing the importance of maintaining exacting standards for compliance.
The implications for you, as legal advisors, is that there will be no room for cutting corners or pushing boundaries regarding tax law. The IRS’ increasing reliance on AI presents both a challenge and an opportunity to further fortify your practices, following strictly the legal requirements when it comes to tax administration. With AI becoming part of the regulatory fabric, compliance is not only a legal obligation, but also an operational necessity.