AI Use in IRS Tax Gap Audits Lacks Transparency, Watchdog Says

The IRS has failed to document elements that would improve transparency surrounding an artificial intelligence program the agency is piloting to help lower the tax gap, a report from the Government Accountability Office found.

The GAO report released Wednesday includes six recommendations that the IRS agreed to, including multiple forms of documentation around its use of AI in its efforts to increase confidence in the agency’s ability to detect taxpayer noncompliance.

• The IRS has said the gross tax gap for 2021 will be $688 billion, up from an average of $496 billion each year between 2014 and 2016, the most ...