"As companies continue to invest billions in AI, employees and shareholders are more frequently demanding to see tangible results. Yet, at the end of 2025, only 15% of executives reported that AI integrations increased profits. To understand how businesses will close the gap between AI enthusiasm and returns, look to a surprising place beyond the private sector: the Internal Revenue Service."
"A government agency might not seem like a typical business, but it faces this same urgency to show progress with AI and challenges in achieving it. I felt this pressure every day when I led the IRS through one of its most ambitious modernization efforts in decades. In 2023, we began deploying AI in targeted ways to improve taxpayer service, compliance, and operational efficiency. From the beginning, accountability was absolute. Each dollar we spent came from taxpayers so every investment had to produce measurable improvements."
"General Purpose AI For Daily Productivity Widely available tools like LLMs and agentic workflows can help employees conduct initial research and coordinate simple tasks to free up their personal bandwidth. The biggest returns from this lane, however, will come from training workers to apply the technology in the best way for their roles. But much of tax administration operates with a vastly lower tolerance for error; one in which even a low hallucination rate can create unacceptable risk."
Massive AI investment has produced few profit increases, creating pressure to show measurable results. The IRS pursued targeted AI deployments focused on taxpayer service, compliance, and operational efficiency under strict accountability because taxpayer funds required demonstrable improvements. The operational blueprint prioritized identifying urgent pain points, applying AI practically, measuring impact, and scaling proven solutions. Value will come across three lanes: general-purpose tools to boost daily productivity with worker training, purpose-built systems for sensitive processes with low error tolerance, and compounded wins from integrating different AI forms to reduce risk and increase returns.
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