After Eliminating 25% Of Its Staff, The IRS Is Turning To AI Agents. 'It Would Be Negligence' Not To Use AI Tools

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The IRS laid off or lost a quarter of its workforce between January and May, dropping from 103,000 to around 77,000 employees, according to the October Treasury Inspector General for Tax Administration report. Now, it’s turning to artificial intelligence to help fill the gaps.

The report says that the IRS has “used AI to improve the efficiency and effectiveness of audits. For example, the IRS integrated statistical and machine-learning techniques into the process used to select tax returns for audit.”

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AI Agents To Assist Overworked Departments

The IRS is also deploying Salesforce’s (NYSE:CRM) Agentforce AI agent platform across multiple divisions, including the Office of Chief Counsel, Taxpayer Advocate Services, and the Office of Appeals, according to Axios. These departments handle complex casework, taxpayer disputes, and assistance services, areas where personal interaction is often key.

“The aim of the tech is to help overworked IRS agents get through customer requests more quickly and efficiently,” Salesforce Executive Vice President of Global Public Sector Solutions Paul Tatum told Axios. He emphasized that the AI will not make final decisions or handle taxpayer money. “There’s a lot of guardrails put in … [they’re not] allowed to make final decisions, they’re not allowed to disperse funds.”

Tatum added that Salesforce “doesn’t advocate for a blind AI processing tax returns without a human being involved in reviewing and supplementing it.”

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The technology will focus on summarizing cases and searching documents–streamlining tasks that typically take up a lot of employee time.

Layoffs Spark Criticism And AI Concerns

The cuts were pushed by Tesla CEO (NASDAQ:TSLA) and former head of the recently disbanded Department of Government Efficiency Elon Musk. The agency gutted the IRS and pulled taxpayer data earlier this year. The agency also faced furloughs during a government shutdown.

The IRS has reportedly lost one-third of its tax auditors compared to last year. That's a major blow to enforcement capabilities, especially given that auditing the top 0.1% of earners can return up to $26 for every $1 spent, according to an analysis by Better IRS.

Still, some inside the agency say AI is the only path forward. Office of Chief Counsel senior-level counsel for technology and a 38-year IRS veteran Rob Fitzpatrick, told Axios that he initially resisted AI but changed his mind.

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“It would be negligence if I didn’t start now using those AI tools to take our automation and now go head-to-head with some of the law firms,” he said.

Fitzpatrick called the adoption of AI inevitable and said the real decision is whether to embrace it to become more efficient or fall behind. “I think all of us have to realize that the change is coming,” he told Axios. “You either have to adopt the change and make yourself more efficient so that you can produce more work, or you don’t, and you leave.”

Whether AI will truly help the agency recover lost tax revenue or result in more frustration for taxpayers remains to be seen.

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This article After Eliminating 25% Of Its Staff, The IRS Is Turning To AI Agents. 'It Would Be Negligence' Not To Use AI Tools originally appeared on Benzinga.com

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