Tax Law Center Blog

Earlier this month, the Internal Revenue Service (IRS) has reportedly initiated a deployment of Salesforce’s AI platform, Agentforce, across key controversy and compliance divisions—including the Office of Chief Counsel, the Office of Appeals, and the Taxpayer Advocate Service (TAS). The deployment presents a material change to IRS administrative tax procedure.

Context: Technology as the Solution to a Staffing Deficit

The context for this AI deployment is important. The IRS experienced a steady decline in its workforce, with the total number of employees falling significantly. This contraction coincided with an increase in the complexity of the tax code and a drop in enforcement activity, particularly for high-income and complex corporate returns.

The AI strategy is intended to solve the IRS staff deficit by leveraging technology to restore capacity. This urgency was articulated by an IRS official in the Office of Chief Counsel, Rob Fitzpatrick, who noted, “I think all of us have to realize that the change is coming… You either adopt the change and make yourself more efficient so you can produce more work, or you don’t—and you leave.”

The IRS’ stated goal is for Agentforce to handle data-intensive tasks such as case summarization, policy retrieval, and information search. This frees up staff to focus on highly specialized work, specifically complex tax law interpretation and enforcement activity targeting the tax gap.

Procedural Implications for Tax Professionals

The integration of AI directly into the controversy workflow has tangible consequences for how cases are prepared and presented:

1. Elevated Screening in Appeals: The Office of Appeals generally aims to resolve tax disputes based on the “hazard of litigation” standard. AI will likely function as a gatekeeper, quickly analyzing taxpayer protest letters and case files. Practitioners must ensure that all Appeals submissions are:
   • Data-Driven: All claims must be meticulously documented, anticipating that the AI will perform a rapid, systemic cross-check against other IRS data sources.
   • Procedurally Sound: Any submission that fails to precisely adhere to procedural requirements (e.g., those detailed in the Internal Revenue Manual (IRM)) risks being efficiently triaged toward an adverse or delayed outcome.
2. Increased Rigor in Chief Counsel: By assisting Chief Counsel attorneys with legal research and internal memoranda, AI enables the IRS to build its litigation positions more rapidly and consistently. This requires defense counsel to enhance their preemptive analysis of legal strategy and prepare for a government legal team that is quicker to formulate its arguments under the Internal Revenue Code.
3. The Role of Human Discretion is (purportedly) Preserved: Despite the technological advancements, the ultimate decision-making authority remains with human personnel. Paul Tatum, executive vice president of global public sector solutions at Salesforce, stated that the AI agents are built with “a lot of guardrails” and are “not authorized to make final decisions” or “disperse funds.” This purportedly means that complex settlement negotiations, qualitative legal risk assessments, and the ultimate judgment of a case remain human functions.

Strategic Practice in the Modern IRS Era

The IRS is slowly transitioning into a system where compliance is monitored, and controversy cases are processed with greater technological efficiency. Tax professionals must now navigate a hybrid system where human judgment may be the final word, but AI is a critical filter.

If your client’s case requires expertise to navigate the complex procedural filters of the modern IRS, especially in IRS Appeals or Exams, our firm provides the specialized tax law counsel necessary to ensure every submission successfully meets the highest standard of review.