Since the first chatbots were installed by the Internal Revenue Service (IRS) in December of 2021, the Service has continued to improve and increase the use of computers to assist taxpayers. Voicebots, a software that simulates human conversation through an automated interactive voice response system, and chatbots, a software tool that interacts with taxpayers through web-based automated text interactions, are powered by artificial intelligence (AI) and interact directly with taxpayers. The automated IRS bots are designed to reduce the need for IRS staff to answer phone calls.

Former IRS Small Business/Self-Employed Division Commissioner Darren Guillot stated, "The voicebot is a huge success story for the IRS and collection." He noted the IRS has produced far more value from collections related to payment plans created by the voicebots than the cost of producing the technology.

Evgeny Kagan, an Assistant Professor at Johns Hopkins University’s Carey Business School, has researched the IRS bots and estimates they can resolve approximately 30% to 40% of taxpayer inquiries. He notes, "It is not that taxpayers do not want to engage with chatbot technology… they do not like the fact that there might be two service stages. People would prefer human interaction because it is not what we call a gatekeeper process – it is a single, one-stop-shop process."

Mandi Matlock, the Lead Attorney for the Return Preparer Project at the Center for Taxpayer Rights, expressed concern about the chatbots. She stated, “I fear we will be relegated to chatbots and voicebots in greater numbers. The rubber will hit the road when we no longer have access to adequate telephone assisters."

The IRS has focused on chatbots that assist taxpayers in setting up payment plans. The chatbot "automates the preconstructed conversations created through a series of queries based on the available premade options selected by the taxpayer."

The current chatbots primarily operate based on the rules created by the IRS. Future chatbots may use generative AI. However, generative AI is not as accurate.

After interacting with the chatbot, a taxpayer is typically permitted to interact with a live service agent. The chatbot is reasonably good at answering general questions, but generally fails to provide specific information or answer specific questions.

Chatbots were initially created in 2021 because the IRS service level had declined. By September 2022, the voicebots had assisted on over  4.8 million calls. Approximately 40% were answered "within the voicebot without the need to escalate to a live assistor."

Data for 2024 indicates that taxpayers were able to complete a payment plan or receive desired information 22.5% of the time on calls. However, approximately 67% of the calls needed to be transferred to a live agent.

Editor's Note: The IRS clearly needs to improve the quality of chatbots and voicebots. With the current reductions in the IRS budget and staffing, it is highly probable that taxpayers will be more likely to interact with automated assistants in the future. Fortunately, as with all technology that is widely used, it is likely the IRS will be able to improve chatbot capabilities and functionality.