Responsible AI can revolutionize tax agencies to improve citizen services

The
new
era
of
generative
AI
has
spurred
the
exploration
of
AI
use
cases
to
enhance
productivity,
improve
customer
service,
increase
efficiency
and
scale
IT
modernization.

Recent

research
commissioned
by
IBM®
indicates
that
as
many
as
42%
of
surveyed
enterprise-scale
businesses
have
actively
deployed
AI,
while
an
additional 40% are
actively
exploring
the
use
of
AI
technology.
But
the
rates
of
exploration
of
AI
use
cases
and
deployment
of
new
AI-powered
tools
have
been
slower
in
the
public
sector
because
of
potential
risks.

However,
the

latest
CEO
Study
by
the
IBM
Institute
for
the
Business
Value
found
that
72%
of
the
surveyed
government
leaders
say
that
the
potential
productivity
gains
from
AI
and
automation
are
so
great
that
they
must
accept
significant
risk
to
stay
competitive.

Driving
innovation
for
tax
agencies
with
trust
in
mind

Tax
or
revenue
management
agencies
are
a
part
of
the
public
sector
that
might
likely
benefit
from
the
use
of
responsible
AI
tools.
Generative
AI
can
revolutionize
tax
administration
and
drive
toward
a
more
personalized
and
ethical
future.
But
tax
agencies
must
adopt
AI
tools
with
adequate
oversight
and
governance
to
mitigate
risks
and
build
public
trust.

These
agencies
have
a
myriad
of
complex
challenges
unique
to
each
country,
but
most
of
them
share
the
goal
of
increasing
efficiency
and
providing
the
transparency
that
taxpayers
demand.

In
the
world
of
government
agencies,
risks
associated
to
the
deployment
of
AI
present
themselves
in
many
ways,
often
with
higher
stakes
than
in
the
private
sector.
Mitigating
data
bias,
unethical
use
of
data,
lack
of
transparency
or
privacy
breaches
is
essential.

Governments
can
help
manage
and
mitigate
these
risks
by
relying
on
IBM’s five
fundamental
properties for
trustworthy
AI:
explainability,
fairness,
transparency,
robustness
and
privacy.
Governments
can
also
create
and
execute
AI
design
and
deployment
strategies
that
keep
humans
at
the
hearth
of
the
decision-making
process.

Exploring
the
views
of
global
tax
agency
leaders

To
explore
the
point
of
view
of
global
tax
agency
leaders,
the

IBM
Center
for
The
Business
of
Government,
in
collaboration
with
the

American
University
Kogod
School
of
Business
Tax
Policy
Center,
organized
a
series
of
roundtables
with
key
stakeholders
and
released
a

report
exploring
AI
and
taxes
in
the
modern
age.
Drawing
on
insights
from
academics
and
tax
experts
from
around
the
world,
the
report
helps
us
understand
how
these
agencies
can
harness
technology
to
improve
efficiencies
and
create
a
better
experience
for
taxpayers.

The
report
details
the
potential
benefits
of
scaling
the
use
of
AI
by
tax
agencies,
including
enhancing
customer
service,
detecting
threats
faster,
identifying
and
tackling
tax
scams
effectively
and
allowing
citizens
to
access
benefits
faster.

Since
the
release
of
the
report,
a
subsequent
roundtable
allowed
global
tax
leaders
to
explore
what
is
next
in
their
journey
to
bring
tax
agencies
around
the
globe
closer
to
the
future.
At
both
gatherings,
participants
emphasized
the
importance
of

effective
governance
and
risk
management.

Responsible
AI
services
improve
taxpayer
experiences

According
to
the
FTA’s

Tax
Administration
2023 report,
85%
of
individual
taxpayers
and
90%
of
businesses
now
file
taxes
digitally.
And
80%
of
tax
agencies
around
the
world
are
implementing
leading-edge
techniques
to
capture
taxpayer
data,
with
over
60%
using
virtual
assistants.
The

FTA
research indicates
that
this
represents
a
30%
increase
from
2018.

For
tax
agencies,
virtual
assistants
can
be
a
powerful
way
to
reduce
waiting
time
to
answer
citizen
inquiries;
24/7
assistants,
such
as
watsonx™’s
advanced
AI
chatbots,
can
help
tax
agencies
by
decentralizing
tax
support
and
reducing
errors
to
prevent
incorrect
processing
of
tax
filings.
The
use
of
these
AI
assistants
also
helps
streamline
fast,
accurate
answers
that
deliver
elevated
experiences
with
measurable
cost
savings.
It
also
allows
for
compliance-by-design
tax
systems,
providing
early
warnings
of
incidental
errors
made
by
taxpayers
that
can
contribute
to
significant
tax
losses
for
governments
if
left
unresolved.

However,
these
advanced
AI
and
generative
AI
applications
come
with
risks,
and
agencies
must
address
concerns
around
data
privacy
and
protection,
reliability,
tax
rights
and
hallucinations
from
generative
models.

Furthermore,
biases
against
marginalized
groups
remain
a
risk.
Current
risk
mitigation
strategies
(including
having
human-in-system
roles
and
robust
training
data)
are
not
necessarily
enough.
Every
country
needs
to
independently
determine
appropriate
risk
management
strategies
for
AI,
accounting
for
the
complexity
of
their
tax
policies
and
public
trust.

What’s
next?

Whether
using
existing
large
language
models
or
creating
their
own,
global
tax
leaders
should
prioritize
AI
governance
frameworks
to
manage
risks,
mitigate
damage
to
their
reputation
and
support
their
compliance
programs.
This
is
possible
by
training
generative
AI
models
using
their
own
quality
data
and
by
having
transparent
processes
with
safeguards
that
identify
and
alert
for
risk
mitigation
and
for
instances
of
drift
and
toxic
language.

Tax
agencies
should
make
sure
that
technology
delivers
benefits
and
produces
results
that
are
transparent,
unbiased
and
appropriate.
As
leaders
of
these
agencies
continue
to
scale
the
use
of
generative
AI,
IBM
can
help
global
tax
agency
leaders
deliver
a
personalized
and
supportive
experience
for
taxpayers.

IBM’s
decades
of
work
with
the
largest
tax
agencies
around
the
world,
paired
with
leading
AI
technology
with
watsonx™
and
watsonx.governance™,
can
help
scale
and
accelerate
the
responsible
and
tailored
deployment
of
governed
AI
in
tax
agencies.

Learn
more
about
how
watsonx
can
help
usher
in
governments
into
the
future.