Over the last month, the IRS has launched a significant effort to enhance tax compliance.
Their tool: AI. Their target: high-income earners, partnerships, and foreign bank accounts.
For family offices, this means a higher likelihood of being audited.
Proving compliance can take years and cost millions of dollars in defense fees, so quick and accurate access to the relevant documents is of paramount importance. The best way to prepare for an audit is for family to get better at organizing documents.
While rolling out an AI system for this can be useful, firms can start small by creating a tagging system so compliance teams can search and retrieve key files swiftly and easily.
Further down the line, it will be possible to implement AI using a method calling “chunking,” a process that leverages AI to enable larger searches and to tag and organize documents for you. There are solutions out there currently, such as content management system workflows, but these are more error prone than AI.
If your family office is interested in learning more about how current and future AI tools can help in case of an audit, please reach out to us at info@infograte.com.
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