IRS artificial intelligence projects (close encounters of an AI kind).

• Author: Schreiber, Rick

The Service is currently testing and developing a number of projects that will have a dramatic effect on taxpayers and tax practitioners. Recently, the AICPA Tax Division's Tax Computer Applications Committee witnessed some of these projects when it visited the Artificial Intelligence (AI) Lab of the IRS Research Division.

These research projects are prototypes for future IRS plans. In 1986, electronic filing was a research prototype that processed 95,000 returns. In 1999. the number of electronically filed returns has risen to approximately 11 million and may grow to as many as 25 million by 1995.

Telefile,

TeleFile, a direct descendant of electronic filing, was designed by the IRS Technology Research Group to permit taxpayers to file their 1040EZ tax returns over the telephone and thereby obtain their refunds within two to three weeks. (TeleFile data is processed by the programs already developed for electronic filing.) This past filing season nearly 10% of the 1040EZ filers in Ohio (about 125,000 taxpayers) took advantage of TeleFile in a research test conducted in the Cincinnati and Cleveland districts. Next year the IRS will permit selected taxpayers to use a completely paperless version of this system by waiving the requirement for supplying a paper W-2 and by providing for a vofce signature.

If the IRS decides to expand TeleFile nationwide, over 10 million 1040EZ filers will have the opportunity to use this new filing alternative. Almost 90% of this group normally receives a refund, which may provide a strong motivation to file by phone. There are some constraints, however. A TeleFiler must have filed a return the previous year and may not have made a name or address change in the interim. In the Ohio test, one of every six eligible taxpayers filed telephonically when given the opportunity, so it seems that tax return filing by telephone will definitely be part of many taxpayers' futures.

Expert systems

In 1984, the IRS set out to explore artificial intelligence. Since then, 36 midcareer professionals have been sent to study AI either for two years at research universities (Massachusetts Institute of Technology (MIT), University of Pennsylvania, Central Michigan University and the University of Maryland, for a year at an AI consulting firm (Bolt, Beranek and Newman) or for six months in an industrial AI training program Lockheed). An AI Laboratory was established in the Research Division and, since 1987, the agency has been...