Latest News

IRS plans to use AI to crack down on wealthy potential tax violators

Written on Sep 15, 2023

The IRS has started using artificial intelligence (AI) to investigate tax evasion at multibillion-dollar partnerships as it looks for ways to better police hedge funds, private equity groups, real estate investors and large law firms. 

The IRS has leveraged AI to open investigations into 75 of the largest partnerships in the U.S. that each have more than $10 billion in assets on average. 

Machine learning tech helped identify the targets, which include hedge funds, real estate investment partnerships and law firms, while seeking threats to the tax system in a segment that's historically seen limited scrutiny, the service said. 

The IRS is prioritizing cases involving taxpayers with incomes above $1 million but tax debts of more than $250,000. 

It said around 1,600 taxpayers fall under this category and "owe hundreds of millions of dollars in taxes." 

Danny Werfel, IRS commissioner, said in a statement the new effort to hold some of the wealthiest filers accountable was made possible through Inflation Reduction Act funding. 

Werfel said the pre-IRA years of underfunding "led to the lowest audit rate of wealthy filers in our history." 

He said there will be "no change" in audit rates among middle- and low-income filers for "years to come." 

The announcement is part of the Biden administration's effort to increase revenue by billions of dollars over the next decade through new tax compliance measures. 

Related Upcoming Events