What kind of tools can the IRS use to find those who evade their taxes?

On Behalf of | Nov 18, 2021 | Tax Audits

The Internal Revenue Service (IRS) is evolving. This federal agency is shifting from a reliance on agents and manpower to increased use of technology. The agency is using data analytics and software to dig into tax returns (or the lack thereof) to find potential tax cheats. But, what are these tools and how do they work? Are they effective, and what should you do if the feds or a state taxing authority flag your taxes as questionable?

Two key tools: AI and taxpayer tips

We do not know much about the details of these tools. We know that the agency’s criminal investigations unit has purchased software from Palantir Technologies, a data-mining firm, to aid in their review of tax cases. This focus on technology was further bolstered by the agency’s recent hiring of over 1,400 staff members who specialize in areas like IT and cybersecurity.

IRS Commissioner Chuck Rettig has also stated that the agency will continue to leverage the use of artificial intelligence (AI) to weed out high-income households who are shirking their tax obligations.

Steps to take if flagged for an audit

Take a notification of an audit seriously, as a failure to meet your tax obligations can result in hefty financial penalties as well as potential imprisonment. Legal counsel at Goldburd McCone has experience dealing with the IRS and state tax authorities and can review the correspondence, your tax history and discuss your options.