AI and the IRS Automated Underreporter Program: What Could Be Next?

The Internal Revenue Service (IRS) has a big job. As of 2019, the IRS's mission statement was, "To provide America's taxpayers top-quality service by helping them understand and meet their tax responsibilities and to enforce the law with integrity and fairness to all.”

Enforcement of the law could take on a whole new meaning if artificial intelligence (AI) is eventually used in conjunction with the IRS Automated Underreporter (AUR) Program.

While it has a certain charm, the IRS mission statement means what it says. The agency works to help taxpayers understand their responsibilities, and it aims to enforce the law. At the same time, the IRS is navigating significant workforce reductions while continuing to expand its use of technology, including AI.

What does the AUR Program do?

The AUR Program is a semi-automated program that matches information you report to the IRS with information that the IRS already knows about you. Off the top, you know this means your W-2 forms, 1099 forms, and maybe something about your mortgage. The program also reviews a wide range of wage documents, including miscellaneous income reporting, gambling winnings, third-party payment platform information, pension and retirement distributions, employee benefits, cryptocurrency transactions and investment-related information.

The AUR Program is a matching tool that can quickly flag incongruities between what a taxpayer reports and information from other IRS resources. For taxpayers who believe the IRS cannot figure out what you are doing, you are underestimating the Program.

A recent report by the U.S. Government Accountability Office (GAO) discusses the integration of AI into IRS processes. The report cites 126 active AI use cases as of June 2025. This includes 43 use cases related to tax compliance and fraud detection, 18 of which were operational at the time of the report. Overall, the GAO found that the IRS is lacking a strategic plan for overall implementation.

The GAO report does not indicate that AI is currently being used in conjunction with the AUR Program. However, with the IRS expanding its use of AI for tax compliance and fraud detection, could the Program eventually become part of that effort?

If the increasing ability of the IRS to expose shady aspects of your tax return worries you, download our resource guide, Five Ways to Avoid a Tax Audit, for additional background on IRS audits and common audit triggers. 

Could AI make the AUR Program more powerful?

The possible future combination of AI and the AUR Program could be of concern to anyone currently engaged in tax evasion or other financial sleight of hand when it comes to reporting income and payment of taxes. AI tools can analyze large amounts of data and identify patterns or anomalies that may warrant further review. If these technologies are eventually used together, taxpayer data could potentially be analyzed and matched more efficiently against information already available to the IRS.

In fiscal year 2025, the AUR Program closed nearly one million cases, resulting in $5.9 billion in additional assessments. As technology continues to evolve, taxpayers should expect the IRS to continue expanding its use of data analysis and automated tools to identify reporting discrepancies. 

Facing tax fraud allegations or an IRS investigation?

If you are concerned about the growing possibility of exposure to tax allegations or are involved in a tax controversy with the IRS, speak with an experienced tax attorney to understand your options. Our legal team offers strategic guidance for matters involving the IRS. Set up a consultation or call us at 440-250-9709. We serve clients across the U.S. and internationally from our offices in Cleveland and Chicago.