IRS – Prepare for AI TaxSlop

As the Harvard Business Review recently documented[1], the corporate world has woken up to "AI Workslop"— the phenomenon of employees utilizing AI to create dodgy and suspect work product, without legitimate substance.  Employees often pass this content onto their managers or team members.  In turn, this causes their team members to increase the amount of time reviewing, verifying and even completing assignments when certain material details are absent.

                        The Harvard Business Review Article estimates an astonishing 40% of corporate employees have received one incident of AI Workslop within the past month.  The Article goes on to posit that one out of six (about 15.4%) of all content received by such persons is AI Workslop. 

                        It is my firm belief that the IRS should prepare for similar, or higher, amounts of AI Workslop in tax returns for this year and the coming years.  When AI Workslop meet taxpayer returns, I coin this phenomenon "AI TaxSlop".

                        This belief comes from my solo tax practice where I advise clients of all stripes (high income, low income, new business, old business) who are increasingly using AI for taxes.  In some instances, they have learned a creative new tax strategy that they likely would not have considered otherwise—one such client utilized AI chatbots to learn that he could invest certain capital gains received in a year into a Qualified Opportunity Fund.  Yet, there were some non-trivial aspects missing from the Chatbot's report.  A QOF requires certain tests that must be passed, and there is a certain safe harbor exception to the test for working capital, which must be documented by recording the purposes of the working capital.[2]  My client's AI summary plan did not mention this documentation, and could have jeopardized the entire QOF and his investment therein. 

                        This missing piece of critical information is AI TaxSlop—work product that, coming from a human tax professional, would not have been acceptable.

                        In other instances, I have received illegible requests from prospective clients that were clearly AI generated Workslop.  One request was for me to form a fund that would invest in US gold and silver investments, with tax structures formed in foreign jurisdictions, which were highly questionable in my opinion.  Another instance was a contract review, which they produced from AI, that included, for no reason, a closing date provision titled "Closing Date" that stated "There shall be no closing date for this contract." 

                        The recurring motif from my encounters thus far with AI Workslop in the legal realm, is that it is always sensible to a non-lawyer, but nonsensical to any lawyer.  In the QOF example, the steps that the AI report provided were all sensible—but any attorney, even a non-tax attorney, would immediately ask: "are you just going to go through these steps and file your return?  Or are you planning to document these transactions and follow the applicable IRS guidelines?"  As of the date of this post, I do not know if AI has this common sense knowledge of navigating our legal institutions.

                        This brings me to my final point: if I have experienced AI TaxSlop with people who will reach out to a lawyer for a second opinion, how much more AI TaxSlop will the IRS experience when they receive tax returns? 

                        Even if there is a 6.16% (40%*15.4%) AI TaxSlop rate, this means that approximately 14 million tax returns[3] for a given tax year potentially classified as AI TaxSlop. 

                        14 million Tax Returns that could potentially be missing material aspects is a significant problem for the IRS.  They are likely to encounter returns that are underreporting income by reason of people utilizing AI chatbots to create favorable tax positions that reduce their tax burden.  While these chatbots may directly state that they are not giving legal or tax advice, people are prone to ignore this disclaimer.  At the very least, unless they are highly concerned with ethically completing their tax returns and/or have the money to hire a tax attorney, people are likely to take the chatbot's advice and verify it through their own research.  Regardless, the outcome is the same: 14 million AI TaxSlops are potentially winding up at the IRS's return center this year, which the IRS will have to dedicate time, money and effort to correct.  On the other hand, they could simply ignore them, and risk the likelihood of underreported income.

                        Some are likely to argue that this consideration will be moot in several years, after AI has advanced enough that Workslop is no longer a consideration.  Yet this ignores the several years that it will take to get there—if we are in the sewer of AI Workslop right now, we do not know what lasting effects this time in the sewer will have into the future.  The two or three years that we are down in these sewers could be two or three years that are pivotal to the future of our country.  Reduced revenues, increased burdens on the IRS and an increased propensity for people to find tax reduction strategies may be the result of this AI TaxSlop.

                        While I raise this concern as a practitioner experiencing firsthand the impact of this technological wave impact on the tax system, these concerns will affect the IRS and therefore the US as a whole.  A prudent IRS commissioner, if ever one is located, would begin an audit and reporting committee tasked with researching the potential scope of AI's impact on returns.  Or, maybe, the IRS will so totally embrace AI to become the hub of AI TaxSlop and the entire country will be under the thumb of the IRS's AI TaxSlop for the next few years. 

Time will tell.

This article is not written as, nor should be construed as, legal or tax advice.

[1] Niederhoffer, Kate, et. al., "AI-Generated 'Workslop' Is Destroying Productivity", Harvard Business Review (September 22, 2025).  Accessible here: https://hbr.org/2025/09/ai-generated-workslop-is-destroying-productivity

[2] See Treas. Reg. § 1.1400Z2(d)-1(v)(A)-(C).

[3] This is 6.16% of 227,303,139, or the number of returns, based on IRS released data provided for 2024 tax years.  Returns includes all paper and electronically filed tax returns, including Other Returns, but excluding all Supplemental Documents.  See https://www.irs.gov/statistics/returns-filed-taxes-collected-and-refunds-issued