The IRS’ use of AI is transforming the way it identifies noncompliance in large partnerships. For industries like private equity and real estate, the implications are significant. This infographic examines discrepancies that could attract IRS scrutiny and offers insights on navigating these challenges.
The IRS is more effective in identifying discrepancies in large partnerships using AI. These advancements go beyond simple error detection—they involve sophisticated algorithms that analyze historical data, cross-reference financials and predict future discrepancies.
AI’s ability to cross-reference returns means that even minor inconsistencies can lead to an audit. The IRS has increasingly focused on data integrity, especially for partnerships with significant cross-border or multistate operations.
Complex partnership structures are prone to errors, which can increase the risk of IRS audits.
Manual processes are increasingly risky as the IRS leverages AI to uncover patterns and anomalies humans might miss. Manual processes are particularly challenging for partnerships managing large volumes of transactions or complex investments.
With the IRS’ focus on partnerships, particularly in high-risk sectors like private equity and real estate, audits are more likely and being unprepared can lead to significant disruptions.
As AI reshapes IRS enforcement, private equity and real estate partnerships must prioritize accuracy and compliance. By understanding the industry-specific triggers and taking proactive steps, partnerships can confidently navigate the complexities of tax audits and focus on growth.
