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 New York Times.
A Lack of Resources
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.
"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.
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.
Going after the Wealthy
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, the organization will (finally) take a look at millionaires with unpaid taxes. They’ll also dig into digital assets, including crypto, – see our guide here – 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 they have been trying, digital assets must be challenging to track.
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.
Just keep your eyes open, they might move on to smaller fish in the future… if they’re not already doing so.
