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Quotes from Darren Guillot, Former IRS Commissioner of the Small Business/Self Employed Division; alliantgroup National Director
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Passing the ‘Smell Test’
The IRS has touted AI often, including in how it used the technology to select dozens of partnerships for audit last year and how it is improving customer service at call centers.
It turned to voice and chatbots to help taxpayers avoid long wait times and get their basic questions answered quickly. The average call wait time for all phone lines was about 8 minutes for the 2024 filing season, a dramatic improvement compared to years prior to receiving resources from the 2022 tax-and-climate law known as the Inflation Reduction Act.
“When I was still there, the IRS was very strict to make sure it’s used properly at appropriate levels in the organization before going forward, with any sort of use of artificial intelligence—that it meets the smell test and that we are doing it for the right reasons,” said Darren Guillot, national director at alliant and former IRS commissioner of the Small Business/Self Employed Division.
But how IRS and other agencies look at AI is changing. The Biden administration recently provided new guidance on AI procurement throughout government.
The IRS in September released interim guidance on the agency’s privacy policy related to use of AI, in line with the requirements in executive orders and Treasury directives, the IRS said in a statement.
“The IRS is committed to protecting taxpayers’ privacy and ensuring transparency about how it uses artificial intelligence to improve our service to taxpayers, combat fraud and identity theft, and support sound tax administration,” the agency said in a statement. It added that these public requirements ensure individuals can contest determinations they believe may have been made based on inaccurate information.
Agencies should start thinking about AI as any other investment, not only to understand its impacts and justify it, but to make sure it doesn’t conflict with or duplicate existing tech, said David Hinchman, a director in the Government Accountability Office’s information technology and cybersecurity team.
A GAO report in June found that the IRS has subpar documentation of its AI audit selection methods.
“Our work has shown that the federal government is very much in the beginning stages of its ‘AI journey’ and an important part of considering what AI means for the government will be to figure out the financial implications,” Hinchman said.
Holding the Checkbook
Beyond Ways and Means, Republican House lawmakers like Judiciary Chair Jim Jordan has requested information from the IRS for its AI use. And those holding the government’s purse strings recently tacked on briefing requests into spending bill reports to get a better handle on what the agency is doing with it.
The Democrat-controlled Senate’s proposed report accompanying the fiscal 2025 spending bill required agency officials to brief the committee within 180 days of the bill’s enactment. They wanted more details on IRS examination of the risks and opportunities associated with AI, along with potential implementation steps and other considerations like the risks of bias and the need for transparency.
The IRS caught heat from Democrats after a study found the agency’s automation to identify potential tax cheats flagged Black taxpayers at higher rates than non-Black filers. IRS Commissioner Danny Werfel cited the agency’s data and its automation processes as the culprit and promised a fix for the disparity.
A spending bill hasn’t yet been finalized. Lawmakers cleared a stopgap funding bill last month, punting a funding fight until after the November election.
IRS enforcement efforts—boosted by billions in funding from the 2022 tax-and-climate law—has been a political football for Congress, but there’s bipartisan support for AI in efforts to improve the taxpayer experience.
Rep. David Schweikert (R-Ariz.), who chairs the House Ways and Means oversight subcommittee, said he remains cautiously optimistic about IRS use of AI, even as the bills continue to rise.
“It’s not about the spending, it’s the quality of the adoption, and the rollout,” he said. “We have to deal with the reality that the technology is here.”
Guillot said he is hopeful that the IRS is able to more efficiently process the pipeline of ERC claims to get the intended financial help to well-meaning businesses.
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As an alliantgroup trusted tax advisor and consultant, Mr. Guillot helps small and medium-sized businesses navigate America’s tax system to secure incentives and credits that stimulate innovation and improve products and services. He also serves them as an expert resource resolving complex compliance and appellate controversies.
Darren recently retired from IRS after 36 years with the agency. From 2019 – 2023, he served as Former Commissioner of the IRS’ Small Business/Self Employed Division, overseeing all IRS domestic and international Collection Operations and its Operations Support functions.
