IRS blitzed with AI-generated comments on proposed tax rules

The Internal Revenue Service and the Treasury Department are getting hit with an overwhelming number of public comments on proposed tax regulations, many of which are being generated by artificial intelligence, making it difficult to distinguish, according to a new report.

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The report, released Tuesday by the Government Accountability Office, found that officials at the IRS and the Treasury risk being overwhelmed by the volume of comments they’re receiving. Members of the public also reported using AI to help them write comments.

“AI can write slightly different comments on the same issue for each person, making near-duplicate comments harder to identify,” said the report.

The report spotlights how far-reaching tax regulations can be influenced by lobbying and pressure campaigns, and that can have an impact on tax professionals’ work. After the passage of the One Big Beautiful Bill Act last year, the IRS and the Treasury needed to propose a number of tax regulations for the expansive legislation, including new tax deductions for tips, overtime, senior citizens and car loans.

The GAO recommended the development of policies and procedures that would help the IRS review large volumes of identical or nearly identical public comments on proposed tax regulations, including comments written with the help of AI. 

The use of AI to generate comments indicates how technology is being used to fuel debate and input from the public, including tax professionals and organizations, and how the IRS’s own technology can have trouble distinguishing between the commenters.

“Treasury and IRS are not following leading practices for public engagement in rulemaking and risk not being prepared to address voluminous public comments, sometimes tens of thousands, on proposed tax regulations,” said the report. “IRS faces increasing challenges with AI-generated public comments which make it more difficult for IRS to identify duplicate comments. IRS has not developed policies for addressing mass public comments or comments written with the assistance of AI.”

In addition, the report recommended improvements in virtual participation options for tax regulatory hearings, and for the IRS to document important public comments made at hearings. 

“Treasury and IRS hold public hearings on proposed regulations in Washington, D.C., upon request,” said the report. “Effective virtual participation by members of the public from across the United States is challenging because IRS only uses dial-in technology rather than widely available video conferencing technology. A federal advisory agency recommends that agencies reduce barriers to public regulatory participation. GAO also identified additional opportunities to document public comments made at hearings to ensure important concerns are considered.”

In the report, the GAO also recommended improvements in how the IRS and the Treasury analyze the economic effects of significant tax regulations, in accordance with executive orders from the White House and memoranda of agreement.

It found they could improve the usefulness of the regulatory economic analyses required for economically significant tax regulations that have $100 million or more in economic effects, with 28 tax regulations designated as such in the period reviewed by the GAO. The Treasury and IRS consistently used one of the Office of Management and Budget’s recommended practices for the economically significant regulations reviewed. 

“This practice of analyzing alternative ways to design the regulations resulted in decisions that made it easier for taxpayers to claim new tax benefits,” said the report. “However, Treasury and IRS used other recommended practices less consistently. These practices, if used, would help Treasury and IRS make more informed selections of regulatory alternatives by providing specific cost, benefit and revenue estimates.”

The response to the report came from Kenneth Kies, acting chief counsel at the IRS and assistant secretary for tax policy at the Treasury. He was reportedly ousted for refusing demands from the White House to participate in audits of specific taxpayers and disagreements over policies involving tax breaks for conservation easements, and is expected to leave in August, the latest in a string of departures of top officials at the IRS since last year. The chief counsel and IRS commissioner are the only two Senate-confirmed positions at the IRS, and both will now be vacant.

“Treasury and the IRS agree that an analysis of costs and benefits of a regulatory action, as reflected in the current [memoranda of agreement], may inform the rulemaking process,” Kies wrote. “We also agree that a robust process to connoisseur public comments is crucial to the rulemaking process. Treasury and the IRS continuously consider and assess improvements to all aspects of the rulemaking process , including the consideration of public comments and the method to provide a public hearing, as administrative law evolves and our technology capabilities expand.”