Caroline Bruckner (American-Kogod; Google Scholar) presents AI and the Modern Tax Agency: Adopting and Deploying AI to Improve Tax Administration (with Collin Coil (American-Kogod)) at Georgetown today as part of its Tax Law and Public Finance Workshop hosted by Emily Satterthwaite and Dayanand Manoli:
The use of Artificial intelligence (AI) was the biggest technology trend of 2023, prompting significant news coverage, business developments, and regulatory changes. Although AI tools have been adopted rapidly by millions of users, governments have been slower to develop AI capabilities. More specifically, tax agencies have shown recent interest in using AI as part of their modernization plans, hoping that the technology will enhance the taxpayer experience and facilitate operations. However, deploying AI to improve tax administration comes alongside risks, including bias, unethical usage, lack of transparency, and potential breaches of taxpayer privacy.
To address challenges and opportunities for using AI to support efficient and effective tax administration, the IBM Center for the Business of Government and the American University Kogod Tax Policy Center (KTPC) recently convened a roundtable discussion that included tax agency leaders and experts from the U.S. and around the world. Roundtable participants focused on opportunities and challenges of using AI in tax administration to improve taxpayer experience, streamline processes, and address tax compliance and enforcement. While discussing AI’s potential to facilitate tax agency functions and interactions with taxpayers, discussants also explored related ethical and governance questions.
Three central points emerged during the roundtable discussion:
- AI has the potential to improve the taxpayer experience through education, service, and outreach;
- AI can facilitate tax agency compliance and enforcement activities, especially in addressing emerging asset classes and ever-changing tax rules; and
- As an evolving technology, AI needs to be rolled out alongside risk mitigation strategies and governance structures.
Each of these key points forms a section of this report, which summarizes the roundtable discussion and builds upon the insights of participants. The report draws on comments shared during the roundtable to examine challenges and surface opportunities for AI, focusing primarily on IRS but with implications for tax agencies around the world. While technical maturity and tax collection varies country to country, many of these challenges and opportunities have resonance for with global tax leaders.
