AI Could Increase IRS Audit Scope, Scrutiny For Large Biz

AI Could Increase IRS Audit Scope, Scrutiny For Large Biz

November 15, 2023, Law360

Kevin Otero’s commentary was included in a Law360 article exploring how the Internal Revenue Service (IRS) is planning to use artificial intelligence (AI) to aid its program for auditing large corporations.

Kevin Otero said companies that may not have gotten caught within the audit selection analysis for a few years could now be examined. He added that companies that have been examined may be looked at in a different way based on specific issues that the IRS chooses to focus on. “These new examinations may be more efficient in some ways, and in other respects more burdensome, depending on what the issue is and what the analytics show to the IRS.”

Kevin continued to state that the compliance alerts will allow corporate taxpayers to be on notice about what the agency is doing, and if they should perhaps double back and consider any tax return filings. "It's a way for the IRS to increase companies' awareness of issues and perhaps get voluntary compliance that would save the service from having to engage in direct scrutiny or devote substantial resources in situations where otherwise a soft approach would work," he said.