The IRS flexed its use of artificial intelligence to target some of the wealthiest tax cheats, announcing Friday that the agency will begin exams of 75 of the largest US partnerships beginning at the end of the month. These partnerships were chosen with the help of an AI tool.

“These new tools are helping us see patterns and trends that we could not see before,” IRS Commissioner Danny Werfel said in a press call.

However, the IRS still needs human resources. To conduct these complex partnership examinations, the IRS likely will pull employees from other divisions, Rettig said, adding, “You’re putting your best people on what your most visible aspect is.”

Integrating AI

The IRS works with both internal data scientists—for which it is hiring—and outside contractors to develop AI tools.

Last year, about 40% of Form 1040 returns selected for audit were conducted by AI, said Rettig, who expects the use of AI for individual returns to increase to 100% in 2024.

The use of AI goes beyond audit selection. AI extends into staffing—tracking where new and current employees are needed geographically and within certain divisions, Rettig said. The IRS also works with AI to improve the call centers, such as by redirecting calls from one call center to another if one is backed up.

If a taxpayer wants to set up an installment agreement on taxes they owe, they can engage with a computer system instead of waiting on the phone for an employee, Werfel said.

“That is the type of technology that a lot of private sector and other government agencies have deployed,” Werfel said. “We just haven’t been able to because we didn’t have the investments.”

The boost in funding from Democrats’ tax-and-climate law provided tens of billions of dollars to help modernize the IRS, and a chunk of those funds are allocated toward beefing up the agency’s enforcement efforts.

Werfel credited the infusion of new funds for the agency’s amplified compliance efforts. But he said if the IRS sees further budget cuts in the agency’s annual appropriations, then the agency would have to dip into its tax-and-climate law budget to fund regular operations.

“My big responsibility here is to make the case to Congress and to the American people that if you fund our big budget, it will enable us to keep the lights on and modernize,” Werfel said. “Modernizing the IRS is good for everybody.”