AI for IRS Audits – A Sign of Things to Come


On September 8th, the IRS announced it will start leveraging AI to uncover potential tax fraud, part of their new plan to grow tax revenue through increased compliance.

For us at SineWave, the IRS announcement reinforces a trend central to our reason for being: cutting-edge technology can – and will – continue to solve pressing public sector challenges.

A Deloitte study estimated that the use of AI could eventually yield as much as $41 billion in annual savings for the federal government by reducing required labor hours. However AI’s capabilities go far beyond the potential to improve back office processes. Other use cases we’ve seen include:

  • Visual Intelligence: DoD recently announced it will start deploying AI-enabled detection systems to monitor D.C. airspace via a system that’s 10x more effective than its 9/11-era predecessor.

  • Decisioning: The US Army’s Medical Department is developing wearable physiological monitors that use a machine-learning algorithm to weigh the potential seriousness of wounds, assisting medics in prioritizing treatment.

  • Predictive Insights: The Southern Nevada Health District (SNHD) is utilizing LLMs and Machine Learning to predict which establishments are more likely to be noncompliant with sanitation and health regulations. SNHD estimates they’ll be able to prevent 9,000 food poisoning incidents and 557 hospitalizations in the city each year thanks to their ML-enabled platform.

  • Process Automation: SineWave portfolio company – Clarifai – is currently helping government clients create AI-enabled platforms for automated predictive equipment maintenance, content moderation, and more.

The government’s embrace of AI is continuously evolving, and what the full extent will be is still unclear. On September 13th, most of the US Senate, and several of the country’s top tech leaders – including Tesla and SpaceX CEO, Elon Musk, and OpenAI CEO, Sam Altman – met to discuss Congress’ ambitions to pass AI legislation in the coming months. And just last week, the Office of Management and Budget sent a draft memo to many top government agency technology leaders to “set expectations around how agencies should use and manage artificial intelligence.”

The IRS’ public commitment to leveraging AI is emblematic of a larger desire to both adopt and, just as importantly, showcase the use of cutting-edge technology within the government.

At SineWave, we’re committed to helping the tech ecosystem and public sector work together to realize the potential of cutting-edge technology. As the public sector continues to signal interest in AI – and create clearer frameworks for engagement with innovative startups – we’re excited to be at the center of the conversation.