The IRS has announced the use of artificial intelligence to detect tax fraud, making it more difficult for those who evade taxes. However, the IRS has clarified that the main targets of this new tool are high earners who have a tendency to skip taxes. The goal is to ensure transparency in tax filing for this group of people.
Being meticulous when handling taxation is crucial, whether you're a small business or a high-income earner. Small businesses also need to be aware of particular core facts about taxation.
Why Did The IRS Deploy These Tools?
Apparently, the new move from the IRS came as part of the continuous review process of their methods used in detecting tax fraud such as evasion.
Furthermore, the new development is also part of their plans to capitalize on the Inflation Reduction Act. Coupled with the fact the Internal Revenue Service claims they want to bring fairness to society. They don't want the lower-earning class in society to pay all the taxes.
The IRS has reported a decrease in taxes paid by the upper class. This group includes wealthy individuals, partnerships, and other high earners found guilty of evading taxes. The government is taking action to pursue these individuals to promote fairness in society. Have there been any positive outcomes from these efforts?
Any Results From the Use of AI for Tax?
According to information from the IRS, they already see massive results from using AI in fishing out tax evaders. The government body said they used AI to open more than 75 IRS tax evasion cases against top earners in the United States.
"By the end of the month, the IRS will open examinations of 75 of the largest partnerships in the U.S. that represent a cross section of industries including hedge funds, real estate investment partnerships, publicly traded partnerships, large law firms and other industries. On average, these partnerships each have more than $10 billion in assets," the IRS said in their press statement.
While speaking to the press, IRS Commissioner Danny Werfel said he was committed to changing the trend of high-income earners evading tax.
"This new compliance push makes good on the promise of the Inflation Reduction Act to ensure the IRS holds our wealthiest filers accountable to pay the full amount of what they owe. The years of underfunding that predated the Inflation Reduction Act led to the lowest audit rate of wealthy filers in our history. I am committed to reversing this trend, making sure that new funding will mean more effective compliance efforts on the wealthy, while middle- and low-income filers will continue to see no change in historically low pre-IRA audit rates for years to come," he said.
What's the Next IRS Gameplan?
The IRS says they will be making improvements in many other areas of tax payment. So, there are some aspects of their service which taxpayers will see an immediate positive effect.
First, the IRS says they will be making improvements to their audits. The agency says there will be optimization of their audit involving Earned Income Tax Credits. Furthermore, they also claim their commitment to helping taxpayers to fight off emerging scams and identity theft.