House Judiciary Chair Jim Jordan (R-Ohio) launched an investigation into whether the Internal Revenue Service (IRS) is using artificial intelligence (AI) to allegedly spy on American taxpayers.
Republicans on the panel sent letters to Treasury Secretary Janet Yellen and Attorney General Merrick Garland this week, saying that they are concerned about reports that AI is being used for surveillance purposes, according to a news release issued on March 21. Last year, IRS Commissioner Danny Werfel said that he plans to use AI go after potential tax cheats and to aid the tax revenue agency’s efforts in processing tax returns.
But Mr. Jordan and Republicans wrote that they “have reason to believe” that the IRS and Department of Justice (DOJ) are “actively monitoring millions of Americans’ private transactions, bank accounts, and related financial information—without any legal process—using an AI-powered system,” adding that it is tantamount to a “warrantless financial surveillance is highly concerning and raises serious doubts about the federal government’s respect for Americans’ fundamental civil liberties.”
In a pair of letters sent to Treasury Secretary Janet Yellen and Attorney General Merrick Garland, the lawmakers point to a September 2023 press release in which the IRS said AI “will help IRS compliance teams better detect tax cheating, identify emerging compliance threats and improve case selection tools to avoid burdening taxpayers with needless ‘no-change’ audits.”
Their letters, namely, are seeking more information from both the Treasury Department and DOJ on the AI program. No subpoenas were sent.
“The Committee and Select Subcommittee have reason to believe that the IRS is working with other federal agencies to conduct this AI-powered warrantless financial surveillance. In the video, [Alex] Mena stated that the Department of Justice (DOJ) and ‘Inspector General’ control this AI-powered warrantless surveillance system, ‘not the IRS.’ Additionally, the Treasury Department’s Feb. 28, 2024, press release makes clear that the Treasury Department’s Office of Payment Integrity (OPI) has a ’strong partnership with federal law enforcement agencies,‘ which has ’led to multiple active cases and arrests.'”
The Judiciary Committee also said it will meet with Alex Mena, an official with the IRS, who was captured on camera allegedly speaking about the AI system’s surveillance ability.
They added that the IRS may be working with other federal agencies to use the AI system, noting that Mr. Mena said on camera that the DOJ and its inspector general control the AI-powered system and “not the IRS,” according to the news release. “These allegations are particularly concerning given the IRS’s track record of targeting, harassing, and intimidating American taxpayers and journalists and history of ignoring due process requirements when investigating taxpayers,” they said.
Mr. Werfel and the agency both provided details on his agency’s plans to use AI in September, saying that it would audit 75 partnerships with $10 billion on average.
“These new tools are helping us see patterns and trends that we could not see before,” he said in September. “As a result, we have higher confidence on where to look and find where large partnerships are shielding income … in other words, who are the large partnerships that are shielding income, and where will we find it?”
According to an IRS news release issued around the same time, its AI tools will be used to aid IRS “compliance teams better detect tax cheating, identify emerging compliance threats, and improve case selection tools to avoid burdening taxpayers with needless no-change audits.”
The Epoch Times contacted the Treasury Department for comment Friday.
AI technology has become a point of contention in Washington, especially when it comes to elections. In February, the Federal Communications Commission (FCC) banned the use of AI in robo-calls, saying that they can be used to manipulate people---especially in light of robo-calls using the voices of former President Donald Trump and President Joe Biden were used in some states.
Mr. Jordan’s letter comes as House Republicans floated a bill to limit the IRS’s use of AI, which could require staff to launch investigations into potential violations of Americans’ privacy. The measure was sponsored by Reps. Clay Higgins (R-La.) and Eric Burlison (R-Mo.).
“The weaponization of AI technology is an ominous threat to our constitutional freedoms,” said Mr. Higgins, in statement this week. “We, as a Congress who have been sworn to serve the people, must think seriously about the implications of the rapid deployment of AI technology. We must focus on the balance between the power of AI and the dangers it holds for freedom-loving Americans and our national security.”
James Creech, a senior manager with Baker Tilly’s tax advocacy and controversy team, told Reuters earlier this year that he had some concerns with the IRS AI tools that are being used.
“There’s a reason why people are worried about AI as a kind of an existential threat,” Mr. Creech said, adding that it may “maximize for enforcement” and “we just don’t know.”
“What happens when the IRS AI finds [an issue] because it’s 1.2 standard deviations away from the norm because they’re designed to find anything over one standard deviation,” he said.
