Artificial intelligence (AI) is everywhere, from your Spotify playlist to your tax return. As former Internal Revenue Service (IRS) Commissioner Danny Werfel told Forbes in an interview, “AI is an opportunity and a risk.”
Werfel knows the IRS inside and out: he oversaw it from 2023 to 2025 and helped modernize the agency after years of backlogs and tech struggles. He says the IRS is now using AI to answer taxpayer calls faster, detect fraud, and even flag potential scams before they spread online. It’s a major shift inside one of the government’s traditionally slower-moving institutions.
But Werfel’s larger message is simple: AI can make the IRS smarter, but it can’t make it flawless.
Here are the takeaways from the Forbes piece:
- AI is changing how the IRS works. Early use cases included routing taxpayer calls with AI and answering basic questions automatically. That freed up human agents for more complex issues and reduced wait times. “It’s helping us make better, faster, and fairer decisions,” Werfel said.
- It can’t run solo. The agency is experimenting with large language models (LLMs) similar to ChatGPT, but only inside a closed system. “There is not yet a readiness for tax authorities to completely endorse an LLM functionality,” Werfel cautioned. The IRS knows accuracy and control matter more than speed.
It’s also important to note what the IRS doesn’t allow AI to do:
- Conduct audits
- Perform a tax analysis
- Making adjustments to taxpayer returns
- Engaging in critical thinking
- Sending bills to taxpayers
If AI could engage in the above, then the IRS could have a 100% audit rate and replace all of its agents with the technology. The reality is that the IRS has an audit rate under one percent because AI cannot perform any of the critical functions that their staff do.
And unless one believes private sector tax companies have a magic wand AI solution not available to the IRS, the Washington Post found that AI chatbots for prominent tax preparation companies were ill-prepared to handle complex tax questions, providing “inaccurate or irrelevant responses up to 50 percent of the time.”
Quality control and human oversight are non-negotiable for tax compliance. AI’s outputs are only as good as its inputs. That’s why the IRS is focusing on training its people, not replacing them.
That balance is key. AI can spot fraud patterns and streamline paperwork, but it also introduces risks: hallucinated answers, overconfidence in automation, and a new wave of scams using cloned voices and fake IRS websites. Even the IRS’s own Taxpayer Advocate has issued a warning: don’t rely on AI alone for tax advice.
Werfel’s advice is the same one he gives taxpayers: think before you click. “Before you hit submit on your keyboard,” he said, “think about whether you have enough information – or whether you need to ask questions.”
AI can make taxes faster. But faster isn’t always safer.