IRS Expands AI Use as Staffing Gaps Raise Risk
IRS Expands AI Use as Staffing Gaps Raise Risk
Publish Date: 2026-04-24 10:56:00
Source Domain: www.pymnts.com
The tax deadline has passed. For the IRS, the work is just beginning.
Behind the filing deadlines and refund cycles, the Internal Revenue Service (IRS) is running 126 active artificial intelligence applications across audit selection, fraud detection, taxpayer services and operational workflows. That number stood at 10 in August 2022. The expansion reflects a deliberate shift in how the IRS manages enforcement at scale.
Most of the agency’s active AI use cases are categorized as either improving operational efficiency or advancing tax compliance and fraud detection, according to a March 2026 report from the U.S. Government Accountability Office (GAO). Of those 126 applications, 61% were still in development, with the rest in active operation.
The IRS has used basic data analytics to select returns for audit for decades. The shift to AI changes the scale and precision of that process. Machine learning models now analyze millions of returns simultaneously, scoring each for noncompliance risk and flagging those that warrant attention. The selection criteria are deliberately not made public to avoid giving noncompliant filers a map to avoid detection.
AI is being used to review large volumes of tax and other data to assist staff in identifying which tasks to prioritize and which returns are at highest risk for noncompliance and may need immediate attention, according to a March 25 GAO blog post. The agency has focused this capacity on large corporations, complex partnerships, high-wealth individuals and digital asset users, which represent the highest-value enforcement targets.
The criminal investigation function uses AI tools, including systems developed by Palantir, to process suspicious activity reports and identify compliance patterns at a speed that previously required many hours of agent time per case. Revenue agents also have access to generative AI for drafting information document requests and audit reports, with the AI producing a first draft that the…
