IRS plans to use AI and it could affect the wealthy
The IRS has announced plans to use improved technology and artificial intelligence to collect unpaid taxes from higher-income earners and corporations.
The IRS has launched a plan to use improved technology and artificial intelligence to collect unpaid taxes from people with higher incomes, partnerships, and corporations.
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According to experts, this move could transform tax compliance, but it can also create challenges for the agency. The plans of the IRS to focus on high-level enforcement, including expanded use of AI, could result in catching higher-end tax issues within a few years.
The move follows criticism that the tax body has not been conducting tax audits among the rich.
IRS plans to use AI to audit high earners: What the experts say
“Right now, you file a tax return and play the audit lottery,” said Robert Kováčev, tax controversy partner at law firm Miller & Chevalier.
“But with AI, the algorithm constantly interrogates the data. They can expect greater scrutiny from the IRS in the coming years,” Kováčev told CNBC.
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IRS: Taxpayers should be more diligent in keeping records
“Any taxpayer should keep their tax returns for at least seven years,” he said, noting that it can be difficult to “reinvent the wheel” for an audit when the taxpayer has not kept. a paper trail.The IRS reiterated that it will keep its promise not to increase audits for Americans who earn less than $400,000 a year.
It will also not increase for people with moderate or low incomes. If the use of technology and AI is fully implemented, it is very likely to detect high-level tax issues that previously went unnoticed.
This would include scrutiny of high-income big companies or partnerships like hedge funds, real estate investors, and law firms, among others. The process is expected to bear fruit in three to five years.