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AI Technology Could Help IRS Recover $600 Billion

AI Technology Could Help IRS Recover $600 Billion

A new report indicates that artificial intelligence (AI) technology could help the IRS recover over $600 billion in losses. 

According to an article by Thomas J. Healey, an assistant secretary of the U.S. Treasury under President Ronald Reagan and a current senior fellow at Harvard University’s Kennedy School of Government, it would behoove the federal government to use some of the $80 billion in funding the IRS received in President Joe Biden's Inflation Reduction Act to develop AI systems.

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Credit: Yuichiro Chino/Getty Images

Per Treasury Secretary Janet Yellen, the funds have been earmarked for upgrades to decades-old computer systems, enforcement against white-collar tax evasion, and an increase in staff, which has decreased from nearly 95,000 in 2010 to about 79,000 thanks in large part to retirement.

The budget compromise that was recently signed into law by President Biden reduces the IRS's funding boon, but Healey alleges that there is still plenty leftover to for the agency to make AI advancements. 

He stated, for example, that each filing error made by American taxpayers creates an extra step for IRS personnel, leading to major processing backlogs. As of 2020, the agency had 20 million unexamined tax returns.

One of Healey's major points in defense of an IRS AI algorithm is that the system "could be “trained” on the agency’s massive data sets to pick up on the most commonly made mistakes, then proactively reach out to taxpayers with information and instructions on how to correctly fill out the most error-prone IRS forms."

This would save hundreds -- or even thousands -- of hours of manpower every year.

Healey also notes that by "automating routine tasks, identifying patterns of non-compliance and fraud, and providing better customer service, the IRS might finally be able to propel itself into the 21st century."

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Credit: Yuichiro Chino/Getty Images

Electronic fraud-detection systems are commonplace among tax agencies in Europe, and the IRS would likely find similar levels of success. 

It is worth noting that the IRS already uses artificial intelligence in some capacity. The government agency has partnered with IBM to automate its existing e-File system, which is likely to be revamped in the upcoming months and years. 

What do you think about Healey's argument that the IRS should develop its own AI system?

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Feature Image Credit: KATERYNA KON/SCIENCE PHOTO LIBRARY/Getty Images

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Rebekah Barton

Rebekah Barton

Rebekah's search engine optimization career began completely by accident as a college student. Over the course of her career so far, she has "grown up" with the SEO industry, from writing content while juggling classes to managing her own teams of writers and overseeing SEO strategy in subsequent roles. She is excited to bring her passion for high-quality content to CountingWorks, Inc.

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