The IRS's $10+ million digitization project aims to find crypto malfeasance using AI

As tax season in the US comes to a close, the nation's tax agency is aiming to ramp up its technological capabilities. 

In an informational posting on April 2, the Internal Revenue Service revealed ambitious plans to digitize operations in fiscal year 2021. The initiative includes a shift away from paper, an emphasis on extracting data from poor-quality images and developing new tools based on artificial intelligence and machine learning.

The AI and machine learning projects specifically aim to develop automated customer service "chatbots" and to better track cryptocurrency transactions.

The listing reads: "The IRS utilizes publicly available sources of information regarding cryptocurrency, and an initiative to bring in public, open-source data for necessary deconfliction and analytics could demonstrate value to the Service." 

The IRS envisions AI and machine learning drawing on many data inputs to find information on crypto services:

"An automated process would be established to ingest data into an environment for agency-wide access. Open source data could consist of scrapped dark web/clear web information, social media, public records/filings, and technical components such as available Domain Name Registration (DNS), Geolocational IP data, etc."

The past week has found the IRS heavily involved in crypto. The tax agency is involved in two court actions seeking information on clients of USDC issuer Circle and users of crypto exchange Kraken.

The IRS's press officer had not responded to The Block's request for comment as of press time.

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