IRS Deploys AI To Target Rich Partnerships

The Internal Revenue Service has started using artificial intelligence to investigate tax evasion at multibillion-dollar partnerships as it looks for ways to better police hedge funds, private equity groups, real estate investors and large law firms. From a report: The announcement on Friday demonstrated how a more muscular I.R.S. is using some of the $80 billion allocated through last year's Inflation Reduction Act to target the wealthiest Americans and tackle the kinds of cases that had become too complex and cumbersome for the beleaguered agency to handle. The agency's new funding is intended to help the I.R.S. raise more federal revenue by cracking down on tax cheats and others who use sophisticated accounting maneuvers to avoid paying what they owe. But the allocation has been politically contentious, with Republicans claiming that the I.R.S. will use the funding to harass small businesses and middle-class taxpayers. Earlier this year, Republicans succeeded in clawing back $20 billion as part of an agreement to raise the nation's borrowing cap. That political fight has put the onus on Democrats and the Biden administration to show that the funding is primarily enabling the I.R.S. to target the rich. "These are complex cases for I.R.S. teams to unpack," Daniel Werfel, the I.R.S. commissioner, said in a briefing with reporters. "The I.R.S. has simply not had enough resources or staffing to address partnerships; in a real sense, we've been overwhelmed in this area for years."

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