After criticisms of low audit rates among the wealthy, the IRS on Friday renewed plans to focus on higher-end enforcement, including expanded use of AI to examine large partnerships, such as hedge funds, real estate investors, law firms and more. The IRS announced on Friday that it would focus on higher-end enforcement. This includes expanded use of AI for large partnerships such as hedge fund, real estate investors and law firms. The algorithm constantly interrogates the data with AI. “
Once fully implemented, the newly enhanced technology is more likely to catch previously missed higher-end tax issues, he said.
They can expect increased scrutiny from the IRS over the next few years.
‘More important than ever’ to keep tax records
Even if you’re not subject to increased IRS scrutiny, Kovacev said it’s “more important than ever” to stay organized with tax records, including receipts to support positions from past tax returns.
While the technology may aid compliance efforts, the plan also presents risks for the agency, according to Mark Everson, a former IRS commissioner and current vice chairman at Alliantgroup.
“There’s obviously pressure on the administration to show results,” especially with the 2024 presidential election approaching amid continued scrutiny of the IRS funding.
“They’re going to press for getting those points on the board,” Everson said. But they also can’t afford to make a mistake.
Despite increased funding, the agency still faces a staffing challenge, which is crucial to compliance. He said that the higher-end would fight back if it felt like things were being done incorrectly.