Remember when we thought robots were just coming for factory jobs, truck driving jobs, and maybe your nephew’s job at Taco Bell? Well, surprise: now they’re gunning for your tax pro. That’s right, the machines have been let loose on the U.S. tax code, and the results are equal parts brilliant, terrifying, and hilarious.
A team of researchers recently asked large language models (think ChatGPT’s overcaffeinated cousins) to see if they could analyze and even invent tax strategies. Somehow, the models made headway. There were plenty of flubs and misfires. But, in one jaw-dropping moment, the AI actually dreamed up an entirely new tax loophole that no human had stumbled on before.
Yes, you read that right. A computer just invented a tax shelter. Somewhere in Manhattan, a million-dollar-a-year tax lawyer clutched his Montblanc pen and screamed into a silk pillow.
Here’s what happened: the AI took some obscure pieces of tax law involving common trust funds and financial straddles. (Picture a Wall Street yoga pose where one leg makes money while the other loses money). Congress tied up that loophole long ago. But AI figured out a sneaky workaround involving accounting periods that let the taxpayer claim the loss without getting stuck with the gain. It was clever. It was devious. And it was . . . completely legal on paper.
If that makes you queasy, you’re not alone. The IRS loses over $600 billion a year to clever tax maneuvers, and now the bots are writing their own playbooks. The good news? The IRS can use these same tools to sniff out abuse faster than ever. So now the machines are playing both sides of the game, helping taxpayers find tricks while helping the government shut them down.
So what does this mean for you, the regular tax-paying citizen who just wants a legal plan to pay a bit less? A few things.
First, don’t panic. AI isn’t about to show up offering to file your taxes for 10% of whatever it saves you. These systems are still rough around the edges. They confuse “viable” (could work, at least enough to avoid penalties) with “correct” (actually will work in Tax Court). They also sometimes make up nonsense, like insisting that dividends that U.S. subsidiaries pay to their parents are taxable. (They’re not.) So no, we’re not living in “Terminator: IRS Edition.” Yet.
Second, this development is a big red flag that enforcement is getting sharper. The IRS is already ramping up audits for high earners and partnerships. If they add AI sniffing tools to the arsenal, it’s going to get a lot harder to hide. Think of it this way: if tax evasion used to be a game of hide-and-seek, now the seeker has night-vision goggles, a heat map, and a drone.
Finally—and this is where we earn our stripes—it proves the value of proven planning and strategies. You don’t need AI to beat the IRS. You need a human who understands the rules, keeps you out of trouble, and helps you take advantage of the benefits Congress intended. The smart money doesn’t cut corners with sketchy loopholes. It stays compliant, transparent, and ahead of the curve.
So yes, AI might one day replace your Uber driver, your barista, or even your trivia team captain. But when it comes to taxes, the smartest algorithm in the room is still the one with a pulse, a license, and maybe a little gray hair from surviving three decades of IRS notices. Planners like us aren’t obsolete; we just have a new robot intern to keep an eye on.