The Federal Revenue Service has turned to artificial intelligence (AI) to uncover tax and customs fraud with greater precision. Developed internally by IRS tax auditors and analysts, these AI tools now monitor cryptocurrency transactions, detect irregularities in imports, and analyze compensation requests to identify potential tax evasion.
How AI Is Changing Tax Compliance:
The IRS has a vast data repository that powers this AI-driven approach, helping it transform raw data into actionable insights. Every transaction, from tax filings to cryptocurrency movements, becomes input for this new system, enhancing fraud detection capabilities without violating personal privacy laws.
Key Points:
Crypto Monitoring: AI tools now scrutinize cryptocurrency transactions to detect potential tax evasion.
Data Security Compliance: Constitutional lawyer André Marsiglia states that this IRS initiative doesn’t violate the General Data Protection Law (LGPD) as it serves a regulatory, not commercial, purpose.
Advanced AI Techniques: The IRS team, equipped with Python-based algorithms, plans to expand the technology with generative AI and knowledge graphs to improve accuracy and detection.
According to the IRS, the new Analytics technology is "transforming tax administration" by increasing precision in detecting fraud. This AI system showcases how technology can redefine regulatory compliance in the age of digital finance.
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