On Friday, the IRS announced its plans to begin auditing some of the wealthiest individuals and, with the help of AI, certain complex, large partnerships. Roughly 1,600 millionaires owing at least $250,000 in taxes and 75 partnerships with an average of $10 billion in assets could receive the IRS exam notices as early as the end of this month.
New audits for other large partnerships should be expected. In October, the IRS intends to send compliance alerts to partnerships with $10 million in assets based on discrepancies in their year to year balance sheets. If the taxpayer cannot explain the discrepancies to the IRS' satisfaction, then the IRS could add the taxpayer to the audit stream.
The IRS' adoption of AI for large partnerships (and presumably, the targeted high-net-worth individuals) will set a precedent that could reshape the audit landscape for all taxpayers.
