AI, due diligence and the new IRS - Accounting Today

Oh, marvellous — the US taxman is getting a shiny new AI, just as his budget gets slashed. The House Appropriations Committee, in its infinite wisdom, has advanced a smaller IRS budget for fiscal 2027 while simultaneously demanding the agency embrace AI and data analytics for enforcement. Because nothing says 'responsible fiscal management' like buying expensive new technology while cutting the staff who might actually need to use it. The logic, I assume, is that AI will somehow work its magic and audit the rich with zero human oversight — which is exactly how we avoid another 'tax the poor, refund the wealthy' fiasco.

But wait, there's more. Tax professionals are now warned they must independently verify any AI-generated citations or recommendations before sending them to the IRS. In other words, the AI can't be trusted to get its facts straight — even by the people being audited. So we're expected to pay for a system that hallucinates tax code, then pay tax accountants to fact-check it. It's like paying a chef to burn your dinner and then tipping the fire brigade to put it out. The committee's solution to an overworked IRS is to give it a chatbot that need babysitting.

And let's not forget the grand tradition: the IRS's new AI will likely be about as accurate as last year's TurboTax 'help' feature. The committee will then hold a hearing, express 'deep concern', and allocate another million for 'AI oversight training'. Because the only thing more bureaucratic than the IRS is a bureaucrat's idea of how to fix it.