Source correction, October 1, 2026. GAO's model-documentation warning concerned annual research audits. This article now distinguishes that warning from GAO's separate findings about partnership-model design and links the IRS budget document behind the quoted enforcement plans.

AI Regulation Tracker / Agency enforcement practice

How the IRS Uses AI to Pick Partnership Audits

GAO reported two AI models for partnership audit selection in 2024. The IRS described further enforcement plans in its fiscal year 2027 budget, while GAO and the Taxpayer Advocate Service reported staffing reductions.

By Anthony Guerriero · Published June 28, 2026 · Last updated October 1, 2026

How the IRS Uses AI to Pick Partnership Audits

The Leveraged Years AI Regulation Tracker

The IRS already uses artificial intelligence to help decide who gets audited. The Government Accountability Office reported in June 2024 that the IRS "currently uses two AI models to help prioritize partnership returns for audit", intended to surface the highest-risk large partnership returns, and in 2026 the agency told Congress it plans to expand AI across enforcement even as its staff shrinks. The cited sources do not disclose the models' inputs or selection thresholds. Primary source: U.S. GAO, "Artificial Intelligence May Help IRS Close the Tax Gap" (June 6, 2024).

Regulatory Briefing

Bindingness: Agency enforcement practice. This article covers the IRS's operational use of AI to select returns for audit. The cited announcements do not create a new statute or regulation.
Scope: United States federal tax enforcement / Primarily large and complex partnerships and high-income, high-wealth filers, with GAO also reporting AI use in the IRS's annual research audits and in selecting some refundable-credit claims for review.
What Changed: The IRS has moved audit selection toward machine learning. In June 2024, the Government Accountability Office reported that the IRS "currently uses two AI models to help prioritize partnership returns for audit", intended to surface the highest-risk large partnership returns. The agency built this out under its 2023 enforcement push aimed at high earners and partnerships, and in 2026 it told Congress it plans to expand AI across enforcement even as staffing falls.
Who This Affects: Large partnerships and the CPAs, tax directors, and high-net-worth advisors who prepare and defend their returns, plus any high-income filer in the IRS focus segments. The cited sources do not disclose the models' inputs or selection thresholds.
Current Status: Reported use; expansion planned
Effective Date: GAO reported AI use for partnership audit selection in June 2024. The IRS described planned expansion in its fiscal year 2027 Congressional Justification (April 2026).
Primary Source: U.S. GAO, "Artificial Intelligence May Help IRS Close the Tax Gap" (June 6, 2024): https://www.gao.gov/blog/artificial-intelligence-may-help-irs-close-tax-gap
Workflow Impact: The cited sources describe AI-assisted selection without disclosing the model inputs. Prepare substantiation, reconciled balance sheets and explanations of material positions before an examination. These are documentation recommendations, not predictions of an audit score.
Operational Next Step: For every large partnership and high-income client, prepare an examination-ready file. Reconcile beginning and ending balance sheet figures, attach the required statements that explain differences, document the basis for large or unusual positions, and keep substantiation organized at filing time rather than assembling it after a notice arrives.
Last Verified: October 1, 2026

GAO's findings on partnership audit selection

The IRS uses machine learning to help select large partnership returns for examination. GAO described two models for that work in June 2024; the IRS later outlined plans to expand its use of AI in enforcement.

In a June 2024 WatchBlog post on the tax gap, GAO wrote that the IRS "currently uses two AI models to help prioritize partnership returns for audit", and that "The models are intended to help select the highest risk large partnership returns for audit." That statement describes the partnership models GAO reviewed in 2024. GAO's March 2026 report separately confirms that AI helps prioritize returns for compliance work.

The IRS's large-partnership program

GAO noted that the number of large partnerships grew by nearly 600 percent between 2002 and 2019, that these returns are complex, and that when the IRS does audit them the result is often no change.

In September 2023, in release IR-2023-166, the IRS announced what it called a sweeping effort to shift attention toward high-income earners, partnerships, and large corporations. It described expanding its Large Partnership Compliance program "With the help of AI," using what it called "machine learning technology" to identify compliance risk, and announced plans to open examinations of 75 of the largest partnerships in the country by the end of that month. Those partnerships each held more than 10 billion dollars in assets on average. The same release committed the IRS to not raising audit rates on filers earning less than 400,000 dollars a year.

What the sources disclose about model inputs

GAO reported in June 2024 that the IRS used two AI models to prioritize partnership returns, aimed at the highest-risk large returns. The cited sources do not disclose the features those models weigh, their thresholds, or the factors that raise a score.

In IR-2023-166 the agency flagged partnerships over 10 million dollars in assets that show differences between end-of-year balances and the next year's beginning balances, often without the required statement explaining the difference, and called that an indicator of potential noncompliance. The release identifies a compliance concern without establishing whether or how an AI model uses it.

GAO's documentation and design recommendations

In the same June 2024 WatchBlog post, under annual research audits, the watchdog wrote that the IRS "could do more to document these AI models" so they are transparent and applied consistently, and warned that "Otherwise, IRS risks not being able to explain how it selected taxpayers for these more burdensome audits." That documentation warning concerned annual research audits, a separate part of GAO's post. For partnership selection, GAO identified design weaknesses and recommended improving the models' ability to select noncompliant returns.

Those findings describe the programs GAO reviewed at the time. They do not establish the current status of every recommendation or a taxpayer's ability to challenge a particular selection.

2026: more AI, fewer people

In March 2026, GAO published a follow-up report finding the IRS had 126 active AI use cases as of the prior summer, spanning taxpayer services, operations, and compliance and fraud detection, including audit selection. IRS officials told GAO they plan to keep expanding AI use. In the agency's fiscal year 2027 Congressional Justification (April 2026), IRS leadership said the agency is "modernizing enforcement through expanded use of artificial intelligence, advanced analytics, and improved data integration" to "more precisely identify high-risk noncompliance".

GAO also reported that the roughly 79.4 billion dollars the IRS received in 2022 to modernize has been cut to about 25.9 billion, and that the agency lost roughly 20 percent of its staff in 2025, including 63 employees in the group that supports AI development and oversight. The National Taxpayer Advocate reported that the workforce fell from about 102,000 at the start of 2025 to about 74,000 at year end. These reports document staffing reductions and AI use. They do not establish when a particular return is scored or when human review occurs.

What CPAs and advisors can document before an examination

Keep substantiation and reconciliations with the filed return. The cited sources do not establish that every return is scored at filing.

Reconcile the balance sheet. For partnerships over the thresholds the IRS named, make sure beginning and ending balances tie out, and attach the required statement when they do not. The IRS identified balance-sheet discrepancies in its 2023 release.
Substantiate the large and the unusual. The cited sources do not show how unusual positions affect a model score. Document the basis for them at filing, not after a letter arrives.
Keep the file exam-ready. Organize the supporting records so they are available if the IRS selects the return for examination.
Base preparation on the return's records. The cited sources do not provide enough information to reconstruct a model score.

Source File

Primary Source: U.S. Government Accountability Office, "Artificial Intelligence May Help IRS Close the Tax Gap" (June 6, 2024), reporting the IRS's use of two AI models for partnership audit selection at that time: https://www.gao.gov/blog/artificial-intelligence-may-help-irs-close-tax-gap
Primary Source: IRS, "IRS announces sweeping effort to restore fairness to tax system" (IR-2023-166, Sept. 8, 2023), on the AI-assisted Large Partnership Compliance expansion and high-income focus: https://www.irs.gov/newsroom/irs-announces-sweeping-effort-to-restore-fairness-to-tax-system-with-inflation-reduction-act-funding-new-compliance-efforts
Primary Source: U.S. Government Accountability Office, "Inside the IRS's Use of Artificial Intelligence" (March 25, 2026), on 126 active AI use cases, planned expansion, and funding and staffing cuts (report GAO-26-107522): https://www.gao.gov/blog/inside-irs-use-artificial-intelligence
Last Checked: October 1, 2026
Status: Reported use; expansion planned
Editorial Note: This is workflow-level analysis for tax and finance professionals, not legal, tax, or financial advice. Confirm how IRS enforcement practice applies to a specific client with qualified counsel.

Frequently Asked Questions

Is the IRS really using AI to select audits?

Yes. The Government Accountability Office reported in June 2024 that the IRS "currently uses two AI models to help prioritize partnership returns for audit", intended to select the highest-risk large partnership returns. GAO reports that AI also helps select returns in other compliance programs, including the IRS's annual research audits and some refundable-credit claims, such as the Earned Income Tax Credit.

Does the IRS publish how its audit AI works or what raises a risk score?

The sources cited here do not disclose the partnership models' features or scoring thresholds. In its separate discussion of annual research audits, GAO warned that the IRS "risks not being able to explain how it selected taxpayers for these more burdensome audits", and recommended better model documentation. The IRS has separately identified unexplained balance sheet discrepancies on large partnership returns as a risk signal.

Who is most affected by AI audit selection?

Large and complex partnerships and high-income, high-wealth filers, the segments the IRS targeted in its 2023 enforcement push. The agency committed to not raising audit rates on filers earning under 400,000 dollars a year. The cited sources do not disclose the models' inputs or selection thresholds.

What should a CPA or advisor do about it?

Prepare supporting documentation for every large-partnership and high-income return at filing. Reconcile balance sheets and attach required explanatory statements, document the basis for large or unusual positions, and keep substantiation organized for an examination. These are documentation recommendations; the cited sources do not establish how to predict a selection score.