A bill that encourages the Internal Revenue Service (IRS) to use AI tools to detect tax fraud was passed by the House Ways and Means Committee on July 1.
The AI Tax Integrity Act of 2026 (H.R. 9501), sponsored by Reps. Vern Buchanan (R-FL) and Steven Horsford (D-NV), requires the Treasury Secretary to establish a pilot program within the IRS to use AI to identify potentially fraudulent tax returns. This includes those which are the result of identity theft, fraudulent claims for tax credits, deductions or refunds by individual or business taxpayers, and improperly prepared returns by third-party return preparers.
“Protecting American taxpayer dollars is one of our most important responsibilities in Congress, and we should be empowering the IRS to use modern, emerging technologies to ensure that all tax fraud is detected and that bad actors are held accountable,” Buchanan, vice chairman of the committee, said. “That’s why I’m proud to see my AI Tax Integrity Act with Rep. Horsford get successfully marked up and passed out of committee today. By evaluating how the IRS can harness emerging AI capabilities to strengthen fraud detection, we can ensure that it can conduct efficient, thorough investigations and improve recovery of taxpayer dollars.”
The bill also requires the United States Government Accountability Office (GAO) to submit a report to the House Ways and Means Committee and the Senate Finance Committee evaluating the effectiveness and accuracy of using AI tools and capabilities to assist the IRS in detecting tax fraud.
The IRS Criminal Investigation (IRS-CI) identified $2.3 billion in tax fraud through 1,598 investigations, resulting in 945 prosecution recommendations and 593 sentencing actions. By 2024, the IRS-CI had launched 2,667 investigations, secured 1,571 convictions, uncovered more than $9.1 billion in tax and financial fraud. It also recovered nearly $3 billion through restitution and asset seizures.
Reps. Aaron Bean (R-FL) and David Schweikert (R-AZ) are cosponsors of the bill.
The bill now moves to the full House for a vote.