Robert Kovacev discussed the Internal Revenue Service's (IRS's) growing reliance on artificial intelligence and algorithmic tools to identify potential audit targets. Kovacev explained that the IRS is increasingly using AI to select returns for examination across all taxpayer segments. "[The IRS] is using AI to identify targets for who's going to be audited," he said. "They're doing that at all levels, for everything, from small businesses and individuals across the board." Kovacev cautioned that human oversight remains essential as the IRS expands its use of automated technologies. He emphasized the need for IRS personnel to review algorithmic recommendations and guard against potential bias in audit selection. You need a human IRS employee who reviews whatever the algorithm says and signs off on it," he said. "If you don't have that, you're at the mercy of a black-box algorithm that no one understands." Discussing practical steps for small businesses, Kovacev stressed the importance of maintaining adequate substantiation for deductions and expenses. "One of the easiest ways for small businesses to run afoul of the IRS is they lack substantiation," he said, underscoring the value of contemporaneous documentation. He also advised business owners to pay close attention to information reporting requirements and to seek professional assistance if they become the subject of an audit. Looking ahead, Kovacev expects the IRS's use of AI to continue expanding. "The increased use of AI is an inevitable part of the fact that there's a new tool," he said. "It promises to save money and be more efficient. It's going to be used."