By Tony Morris, IRD
The use of automated algorithms is disrupting industries across the world and tax administration is certainly no exception.
We at Inland Revenue have been using versions of this technology for years to make sense of large volumes of data and to pick out trends in information such as taxpayers’ filing and payment behaviour.
The big difference these days is that the technology is performing these tasks much faster and is organising the data in such a way that allows us to make better decisions more efficiently.
What hasn’t changed is that real human beings control the process and are central to the technology being a success.
So let’s quickly dissolve the myth about robot tax investigators busting tradies for not declaring cash jobs – it just doesn’t happen and never will.
Our people will continue to make all the decisions about when to open a case for investigation and how to handle the data and insights that are produced.
Here’s an insight into how it works in practice: a smart data search might tell us that a group of small businesses may be underreporting income, compared to other businesses of their kind.
Our first assumption will be that we have a group of businesses that need some help to get their taxes right. The next step is to try to help them out.
Of course we’ll take action if a customer doesn’t want to comply or it becomes evident that they haven’t but this only happens after we exhaust all forms of assistance.
Tony Morris is a customer segment leader at Inland Revenue.