IRS audits can provoke anxiety for any taxpayer. The agency’s growing use of AI means that tax enforcement today is far more targeted, data-driven, and efficient than ever before. But what exactly do we know about how the IRS audits with AI these days?
Historically, audits have been selected based on random sampling, specific “red flag” triggers, such as unusually high deductions compared to income, or a high computer score when the return was processed. Returns may also be selected if they include transactions with other taxpayers whose returns were selected (such as business partners or investors).
What role does AI play? That’s unclear. Current budget and policy shifts are reshaping how aggressively those tools are funded, governed, and aimed at different categories of taxpayers.
What IRS Audits with AI Could Mean Right Now
By 2024, near the close of the Biden administration, the Treasury Inspector General for Tax Administration reported that the IRS was leveraging or considering AI-related technology in at least 68 projects. These projects focused on improved customer service, enforcement efforts, and overall IRS operations. Tools involved robotic process automation for high-volume, labor-intensive repeatable tasks; intelligence automation, including chatbots; and analytics to ID suspicious activities specific to large partnerships and examine large hedge funds, private equity groups, real estate investors, and law firms.
But then the Trump administration changed things up. In March 2025, the IRS paused previous efforts. The U.S. Treasury Department announced in April both a staff restructuring and a compliance strategy aimed at focusing more technical engineers and resources toward “doubling collections and compliance,” including “enhanced software tools [to] empower…compliance teams to close the gap more effectively.”
By July 2025, the White House released what it called America’s AI Action Plan, emphasizing rapid deployment of AI across federal agencies, less regulation of AI systems, and a focus on cost savings and operational efficiency rather than new oversight layers. And in September 2025, the Treasury announced “significant progress across its IT modernization agenda within the IRS, underscoring its commitment to improving taxpayer services, enhancing cybersecurity, strengthening compliance, and filing season operations.”
Despite these reports and modernization plans, there are limited public details on the exact tools, models, thresholds, and data sources the IRS now uses.
Audit Timelines Matter
Regardless of how the IRS audits with AI now or in the future, the statute-of-limitations rules on IRS assessments have not changed. In other words, the priorities, investments, and capabilities of future administrations matter. In general, the IRS has three years from the later of the filing due date or the date a return is actually filed to assess additional tax, but that window extends to six years if the taxpayer omits more than a threshold percentage of income and can be effectively unlimited in cases involving fraud or if a tax return was never filed. Even if a return can be processed, if certain information/documentation is missing, then the return is not complete, and the statute of limitations does not start.
For planning purposes, many practitioners advise keeping records for at least six to seven years because substantial understatements, complex transactions, or specific items like bad debts and worthless securities can extend the practical audit horizon. In a world where AI tools can quickly revisit older data and re-score past filings, that long look-back period becomes even more important to consider.
The bottom line: Future AI capabilities could affect returns submitted now. AI-assisted auditors can surface anomalies over several years, making robust, airtight recordkeeping today more critical than ever. And non-filing is especially risky since there is effectively no statute of limitations until a required return is filed. Staying off the radar is not a safe long-term strategy, particularly as IRS audits with AI become better at matching external data with missed or erroneous filings.
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Photo purchased through Adobe Stock 1371764033. December 23, 2025