The Internal Revenue Service recently announced that it has begun integrating artificial intelligence-powered tools across several key departments, in a move that may indicate major changes in how the agency will handle taxpayer cases in the years ahead. Taxpayers should be prepared for changes in how they interact with the IRS in the near future.
Agents across the IRS Office of Chief Counsel, Taxpayer Advocate, and Office of Appeals will be able to utilize Salesforce’s Agentforce AI agent programs to assist with the review and analysis of taxpayer-supplied documents and data, but will leave the more important tasks, such as final decision-making and review of tax returns, as fully human-driven operations.
In the short term, this move will likely help lessen negative effects brought on by recent cuts to the agency’s workforce, following the loss of an estimated 12,000 employees over the past year. Taxpayers may experience reduced wait times as agency employees are able to more effectively sort through requests. While the IRS has stated that the use of these tools will come with significant guardrails to prevent unnecessary errors, taxpayers should also be prepared for potential challenges associated with new technology, including inaccuracies in AI analysis. Taxpayers and tax professionals will need to be exceptionally thorough in reviewing IRS decisions and must be prepared to challenge AI assumptions every step of the way.
If the implementation is successful, it will likely lead to broader and deeper adoption of AI tools across all arms of the IRS over the coming years, which could greatly increase efficiencies across the agency and boost compliance, including audit rates. While future plans are not well known at this time, it is not difficult to imagine that AI data analysis will greatly assist the IRS in flagging accounts and returns that may be suspicious or susceptible to audit risk.
Taxpayers should begin taking necessary precautions now to reduce future audit risk and to minimize risks associated with the agency’s early implementation of AI tools by exercising best business practices, especially document retention practices, and by consulting with tax professionals for both planning and controversy matters.
