The IRS may turn to AI to tackle deluge of public comments

The IRS has an AI dilemma, and the solution may be to fight fire with fire.

The tax-collection agency has been inundated with public comments, “sometimes tens of thousands,” to proposed rulemakings—including some that are AI-generated, according to a Government Accountability Office (GAO) report released on July 21. For example, a 2023 proposed rule related to digital assets “received more than 44,000 comments,” Bloomberg Tax noted.

“IRS has not developed policies for addressing mass public comments or comments written with the assistance of AI,” the GAO report said.

As a result, IRS officials are contemplating “potentially developing AI technology tools to help analyze public comments on proposed regulations,” according to the GAO report. The agency’s lawyers are looking into whether such a tool would meet legal requirements for reviewing public comments. The agency does not currently have an AI system capable of carrying out such a review, the GAO concluded.

The GAO report also broadly examines the agency’s processes of analyzing rule proposals and engaging with the public. Overall, it found the Treasury Department and IRS “are not following leading practices for public engagement in rulemaking and risk not being prepared to address voluminous public comments.” The GAO also found room for improvement with “regulatory economic analyses required for economically significant tax regulations.”

As part of the report, GAO officials offered some recommendations. They advised that economic analyses should include cost and benefit estimates “to inform regulatory alternatives,” as well as estimated changes in federal revenues.

Under the direction of its commissioner, the IRS should create policies and procedures to better sift through mass quantities of public comments, according to the report. (In case y’all forgot, the IRS currently has no commissioner, but it does have a CEO.) The GAO also said the agency should “enhance virtual participation options” at public hearings.