The IRS Combats Tax Evasion with Artificial Intelligence

Friday, November 20, 2015
In the past when the federal government has wanted to catch taxpayers who take advantage of offshore tax shelters, they enlist tax attorneys, accountants, auditors to analyze tax returns that are iffy.  We, the Strategic Tax Lawyers, have years of experience with tax evasion and can offer our clients legal advice to assist with IRS-related issues. Tax experts usually analyze thousands of tax filings to track if any offshore money flows through accounts that seem far-fetched.  These IRS uses the expertise of these professionals since it would take the IRS much longer to unravel any major schemes.


Now the IRS is going one step further. They are investing in technology. This time it is with mathematical algorithms. There is new data that has proven that using technology, such as artificial intelligence, to put a stop to tax evasion by individuals, professionals and corporations, both publicly traded and private. This technology can provide the IRS with a better way to examine offshore tax shelters that keeps billions of dollars from the federal government. 


These tax experts are using the IRS tax code as a formula to construct an algorithm similar to how a calculator works, but in a much more complex manner. The calculation could help detect a tax shelter that is used by a partnership. Through very intricate code, the analysts could detect combinations of partnerships structures that were red-flagged for tax fraud or tax evasion.


This idea is very useful for large corporations which commonly avoid taxes and partake in tax evasion. Since partnerships have different tax rules than individuals and businesses, they are a concern for the IRS.  For example, partnerships are less likely to be audited than corporations and often hide behind hedge funds, real estate, etc.


If the IRS incorporates a data analysis approach, they can detect suspicious actions such as fraudulent deductions on a tax return. However, using technology or algorithms will not require pre-existing evidence. It will focus on the creation of a sophisticated tax dodgers by taking advantage of a tax-shelter feature which takes advantage of fake losses, deductions and credits in order to lower tax bills.


Strategic Tax Lawyers LLP are experienced IRS tax lawyers, estate planning attorneys and offshore attorneys who have counseled clients about the protection of their assets and offshore tax havens.  These IRS tax lawyers can help you plan how to remove guesswork to prevent any issues.  The Strategic Tax Lawyers offer free and confidential consultations about estate planning, estate tax exemption, will & trusts and tax-related issues. Call today at (800) 669-4775 if you need assistance. (thanks to tzvika diner for his help to prepare this article).