Artificial Intelligence (AI) can be a great tool to make life easier, but when it gets in the hands of tyrants, it can be a huge hazard to your wallet.
AI can sift through phone records and invade your privacy in ways you don’t expect, and now it is being harnessed to go after people in ways they didn’t expect.
Now this state is unleashing the power of AI to extract every cent it can from taxpayers, some of whom don’t even live in the state.
New York using AI to get revenue from taxpayers
While the IRS vows to crack down on wealthy Americans, some state tax collectors are also becoming more aggressive.
These tax collectors are trying to perform more audits of high earners, according to some accountants and tax attorneys.
The tax department in New York reported 771,000 audits in 2022, which was up 56% from the previous year, according to the state Department of Taxation and Finance.
However, the number of auditors in New York declined by 5% to just under 200 during the same time due to tight state budgets.
So, how are more people being audited in the state of New York with fewer auditors?
The answer is quite frightening: it’s all thanks to artificial intelligence.
Mark Klein, partner and chairman emeritus at Hodgson Russ LLP said, “States are getting very sophisticated using AI to determine the best audit candidates. And guess what? When you’re looking for revenue, it’s not going to be the person making $10,000 a year. It’s going to be the person making $10 million.”
According to Klein, New York is sending out hundreds of thousands of AI-generated letters in an attempt to get more revenue, which he says is “like a fishing expedition.”
Most of the letters and phone calls taxpayers have received focus on two main areas: remote work and a change in tax residency.
Many wealthy people moved from high-tax states like New York, California, New Jersey, and Connecticut during COVID-19 and relocated to lower-tax states like Texas or Florida.
The high earners who moved took their tax dollars with them, but they’re now facing challenges from states that say the moves were not permanent or legitimate.
Things get even scarier
Not only is New York using AI-generated letters to scare up wealthy taxpayers, but Klein says state tax auditors are also using AI programs to look at cellphone records to find out where taxpayers spent most of their time.
He said, “New York is being very aggressive.”
States like New York have what they call “convenience rules” that argue if you’re employed by a New York company from their New York office, you owe the state tax money, even if you’re a remote worker living in Colorado, for example.
Many wealthy residents in New York City who moved to other states continued to keep their New York apartments.
According to state tax authorities, if they didn’t move with all of their household items, they didn’t actually move for tax purposes.
“The state says, ‘Well, you didn’t really move since all your TV and all your stuff is still in New York. They don’t understand, the wealthy can buy more stuff for the Florida home. They can buy another TV,” said Klein.
Informed American will keep you up-to-date on any developments to this ongoing story.
