The IRS to go snooping with AI super-sleuths

<p>Blame it on the IRS, it’s true. The machines really are coming to get your money. It appears
that the US’ IRS has begun using artificial
intelligence (AI) to investigate tax fraud in large partnerships. The targets
include hedge funds, private equity groups, real estate investors, and major
law firms, according to the <a href="https://www.nytimes.com/2023/09/08/us/politics/irs-deploys-artificial-intelligence-to-target-rich-partnerships.html?smid=nytcore-android-share">New
York Times</a>. </p><p>A lack of resources</p><p>The move comes as the agency attempts to take on cases that have
previously proved too challenging or time consuming. The plan is for the IRS –
or rather their machines – to investigate 75 of America’s largest partnerships to hunt for digital assets, undisclosed funds and more.</p><p>"These are complex cases for IRS teams to unpack," Daniel
Werfel, the IRS Commissioner, told the NYT. "The IRS has simply not had
enough resources or staffing to address partnerships; in a real sense, we've
been overwhelmed in this area for years." Well. There’s an excuse. The IRS
would, no doubt, be perfectly understanding if one of its targets returned with
the same.</p><p>The IRS has recently seen $80 billion allocated to it through the Inflation
Reduction Act and, as ever, aims to increase governmental revenue by going
after tax evaders.</p><blockquote><p lang="en" dir="ltr">IRS will use AI to crack down on wealthy potential tax violators <a href="https://t.co/KHqQGQtOKG">https://t.co/KHqQGQtOKG</a></p>— Axios (@axios) <a href="https://twitter.com/axios/status/1700252953188217283?ref_src=twsrc%5Etfw">September 8, 2023</a></blockquote><p>Going after the wealthy</p><p>The focus on partnerships comes as part of the agency’s directive to
pay more attention to wealthier taxpayers in 2024. In an incredible turn of
events, he organization will (finally) take a look at millionaires with unpaid
taxes. They’ll also dig into digital assets, including <a href="https://www.financemagnates.com/cryptocurrency/" target="_blank" rel="follow">crypto</a>, – <a href="https://www.financemagnates.com/cryptocurrency/cryptocurrency-taxation-guidelines-and-best-practices-for-reporting-crypto-assets/" target="_blank" rel="follow">see our guide here</a> – and look at how high-income
taxpayers use foreign bank accounts to avoid disclosing financial information.
It makes you wonder what they’ve been doing all these years. Though, <a href="https://www.financemagnates.com/cryptocurrency/news/irs-sends-10000-letters-of-warning-to-crypto-holders/" target="_blank" rel="follow">they have been trying</a>, digital assets must be challenging to track.</p><p>While this is a welcome turn of events, it’s a little depressing to
think that the IRS has been underfunded to the extent that it “couldn’t” go
after complex cases involving incredibly wealthy individuals. In this case, it’s
perhaps a wonderful thing to see the machines turned loose. </p><p>Just keep your eyes open, they might move on to smaller fish in the
future… if they’re not already doing so.</p>

This article was written by Louis Parks at www.financemagnates.com.