IRS utilizes AI to detect fraud and bolster customer service. The IRS is moving ahead with 68 AI-related projects funded by the Inflation Reduction Act, while also working to combat the technology’s misuse by fraudsters. In a TaxNotes exclusive (paywall), IRS Commissioner Danny Werfel detailed how AI could help identify fraudulent activity like identity theft and fake tax debts. At the same time, the IRS is deploying AI to assist phone operators and flag complex tax returns for audit. The agency recently denied a request for data on its AI audit-selection algorithms, raising transparency concerns.
Federal tax credits drive EV sales, but their future is uncertain. Tax credits of up to $7,500 have been a decisive factor for most electric vehicle (EV) buyers in 2024, according to a J.D. Power study. Eighty-seven percent of EV buyers benefited from the credit, with nearly two-thirds of luxury EV owners and about half of mainstream EV buyers saying the incentive played a major role in their decision. President-elect Donald Trump has signaled a desire to end the credit to raise revenue for other fiscal priorities.
Boston tax bill debate delayed, with clock ticking on property tax reform. Massachusetts lawmakers delayed action on a controversial Boston property tax bill, which would temporarily change how the city splits property taxes between commercial and residential owners. Boston’s Democratic Mayor Michelle Wu has pushed for the bill to prevent a steep hike in residential taxes, but critics argue the city should reduce spending instead of shifting the tax burden. Lawmakers must pass the bill by Dec. 4 to leave time to adjust 2024 tax bills. Without legislative action, Boston property owners could face significant tax increases in the new year.
New Jersey gas tax to rise nearly 3 percent in January. New Jersey drivers will pay an additional 2.6 cents per gallon at the pump starting Jan. 1, when the state’s gas tax increases to 44.9 cents per gallon. The increase, announced by Democratic Gov. Phil Murphy’s administration, stems from a statutory requirement to meet a $2 billion revenue target for the state’s transportation fund. While the tax rate fluctuates annually, this year’s adjustment pushes New Jersey into the top ten states with the highest gas taxes.
North Carolina Republicans push for a lower tax cap. Republican lawmakers in North Carolina revived a constitutional amendment to cap the state’s top income tax rate at 5 percent, down from its current 7 percent cap; if approved, the measure would go before voters in 2026. The change is already state law but would become more politically insulated if added to the constitution. According to the News & Observer, critics warn that lowering the tax cap could reduce revenue for essential services, while proponents argue it will strengthen fiscal discipline.
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