Curated by Melanie Cohen
Artificial intelligence is already fueling sophisticated email phishing attacks and automated fraudulent tax returns. And by this time next year, we could be confronting an entirely new landscape of AI-enabled fraud.
Deepfake technology is advancing rapidly and could be deployed to impersonate tax officials on a massive scale. Hyper-realistic voice or even video simulations could be used to create fraudulent communications that are indistinguishable from legitimate tax authority directives—or missives from accountants and money managers.
Imagine a loved one receiving a phone call or video message from what appears to be a trusted accounting professional, urging immediate action or the sharing of sensitive financial information. Now imagine that process fully automated.
Combining existing technologies with AI, scammers could churn through tens of millions of potential victims and generate and file millions of tax returns, optimized to claim refunds or credits fraudulently. The method could echo the relentless probing by bots of any computer connected to the internet, except it targets the financial security of individuals and the public fisc.
Taxpayers, professionals, and authorities must either adapt or fall victim. We’re past the point of asking whether AI is a threat. As it continues to evolve, our vigilance and security measures must eclipse scammers outfitted with these new tools.
We must invest in advanced detection systems at the tax authority level, educate taxpayers about emerging threats, and foster a change in security culture that entails constant evolution. Most important, we must all endeavor to stay abreast of the changing accounting and tax security landscape.
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—Andrew Leahey
Look for Leahey’s column on Bloomberg Tax, and follow him on Mastodon at @andrew@esq.social
State Insights
BakerHostletler’s Mike Semes says California’s digital ad tax proposal should consider long-term viability and potential court complications.
Cullen and Dykman’s David Wilkes says a lawsuit’s revival may force New York City to address long-standing inequity in the property tax system and drive flight to the suburbs.
McDermott Will & Emery’s Arthur Rosen, Michael Hilkin, and Jonathan Hague discuss New York remote worker taxes, saying the policy remains vulnerable to constitutional challenges.
Caplin & Drysdale’s J. Clark Armitage, Benjamin Satterthwaite, and Arjun Ghosh review Pillar Two in Puerto Rico and say affected firms should consider possible complications.
Wilmington Trust’s Marguerite Weese reviews tax reduction strategies, saying Californians can move assets rather than focus on the uncertainty of a wealth tax.
Federal Insights
KPMG’s Maura Hodge and Rob Fisher look at the influx of sustainability reporting rules, noting that it will change how companies think about reporting strategies.
Culhane Meadows’ Heather Clauson Haughian and Nicole Joseph say more work needs to be done to make the legal industry equitable.
Global Insights
Fenwick’s Larissa Neumann and Einav Axler explain how multinationals can best decide if they should enter the International Compliance Assurance Program, which assesses tax risk across numerous tax jurisdictions.
AZB & Partners’ Aditya Singh Chandel and Suhail Bansal explain the reservations expressed by the Indian government on the impact and practical application for developing economies of the OECD’s Amount B report.
Columnist Corner
Broad use of IRS Direct File depends on broader internet reach and local support for taxpayer services, Andrew Leahey writes in his latest Technically Speaking column. He says rural areas and libraries need more government funding to expand household access and equip libraries to answer filing questions and provide computer stations.
The Volunteer Income Tax Assistance program “could significantly enhance Direct File’s reach and effectiveness,” Andrew writes, “and it could be expanded to explicitly provide Direct File support and assistance.”
Career Moves
Andrew Wootton has joined Baker Donelson as of counsel and a member of its tax group and will work virtually in the Houston office.
Jordan Goodman, David Hughes, and Samantha Breslow have joined Kilpatrick as partners.
Nick Florio has joined UHY as co-lead of the staffing practice for its Northeast region from the New York office.
Alice Vink has been promoted to private client partner at Fieldfisher in London, effective April 1.
If you’re changing jobs or being promoted, email your submission to TaxMoves@bloombergindustry.com for consideration.
News Roundup
It’s been another busy week in tax news from state capitals to Washington. Here are some stories you might have missed from our Bloomberg Tax news team (login required).
- The clash between Republicans and the Biden administration over the free government-run e-filing program piloted by the IRS is heating up, with the pilot drawing criticism from mostly Republican-led states that argue the tool will do more harm than good for taxpayers.
- The Australian Senate passed a bill that will limit the amount of interest payments on debt multinational companies can deduct.
- The US Tax Court ruled that a Treasury regulation used by the IRS to block a $14.8 million conservation easement deduction based on the easement’s deed is invalid under the Administrative Procedure Act.
- PwC affiliates in the US and Australia agreed to pay $3.35 million in combined penalties for separate audit violations related to business negotiations with a client and an investigation into the leak of government tax plans.
Tax Journals
(Bloomberg Tax login required)
Tax Management International Journal
Jonathan Rhein of Davies discusses classification of foreign government-owned partnerships impacting the ability of qualified foreign pension funds.
Tax Management Memorandum
Jackson Walker’s Jamila Brinson, John Jansonius, Greta Cowart, and Sang Shin say that the Dartmouth College men’s basketball team has put the full court press on their “employer,” labor agencies, and courts of law.
RSM’s Carol Warley, Amber Waldman, and Rachel Ruffalo discuss how best to prepare for liabilities on generation-skipping transfer tax-triggering events.
Our Team
We talk about tax a lot. But you would hear much more if you popped into one of our Teams meetings. Here’s a quick look at what some of us are watching, reading, and listening to this week.
Watching
Katharine Butler (Acquisitions Manager): I’ve recently seen “The Duchess of Malfi” and “King Lear” at the theater—I think that’s enough tragedy for a while.
Reading
Rebecca Baker (Editor-at-Large): “Three Rocks: The Story of Ernie Bushmiller: The Man Who Created Nancy,” a graphic novel by Bill Griffith about the origin of the iconic comic strip character.
Listening
Andrew Leahey (Columnist): I had never heard a Taylor Swift song in my life (I don’t think) before last week. But my daughter is 9, and something has been released on Disney Plus, and now it is all there is in the house. The very air is infused with Swift now.
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