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French tax authorities are using AI to clamp down on tax fraud

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The French government is deploying increasingly aggressive methods to uncover tax fraud, according to a lawyer who specializes in private wealth.

“The administration has put in place systems that throw up information that is triggering more and more inquiries,” said Jerome Barre, a partner at Paris-based Yards, who noted that artificial intelligence is playing a role.

Barre was speaking at a presentation this week by the French Association of Family Offices, or AFFO, which represents the growing sector. France is home to some of the richest individuals and families in the world, including the clan behind Hermes International SCA and luxury titan Bernard Arnault, who founded couture-to-champagne conglomerate LVMH.

Barre said tax officials are focusing in particular on property valuations, which can also affect foreign owners of expensive estates in France. 

“The amount of information that authorities are seeking has multiplied, especially in some regions like Bordeaux,” he said. 

Statistics published earlier this month by the French government show detected tax fraud and resulting penalties to individuals and companies rose to €16.7 billion ($18.1 billion) in 2024, 10% more than the previous year and just over twice the level in 2020. 

Tax inspections have been helped by the use of data mining and artificial intelligence, the report said, as well as the creation of just under 800 jobs and a specialized intelligence unit for the most serious and complex cases.

The government’s increasing efforts to collect taxes comes as the country’s fiscal challenges intensify due to its deficit, political instability and pledges to spend more on defense.

“Fraud is no longer just about isolated cheaters, it has grown into a veritable criminal industry,” Budget Minister Amelie de Montchalin said in the report, which also covered fraud in state subsidies, social security and trade. 

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Accounting

Acting IRS commissioner reportedly replaced

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Gary Shapley, who was named only days ago as the acting commissioner of the Internal Revenue Service, is reportedly being replaced by Deputy Treasury Secretary Michael Faulkender amid a power struggle between Treasury Secretary Scott Bessent and Elon Musk.

The New York Times reported that Bessent was outraged that Shapley was named to head the IRS without his knowledge or approval and complained to President Trump about it. Shapley was installed as acting commissioner on Tuesday, only to be ousted on Friday. He first gained prominence as an IRS Criminal Investigation special agent and whistleblower who testified in 2023 before the House Oversight Committee that then-President Joe Biden’s son Hunter received preferential treatment during a tax-evasion investigation, and he and another special agent had been removed from the investigation after complaining to their supervisors in 2022. He was promoted last month to senior advisor to Bessent and made deputy chief of IRS Criminal Investigation. Shapley is expected to remain now as a senior official at IRS Criminal Investigation, according to the Wall Street Journal. The IRS and the Treasury Department press offices did not immediately respond to requests for comment.

Faulkender was confirmed last month as deputy secretary at the Treasury Department and formerly worked during the first Trump administration at the Treasury on the Paycheck Protection Program before leaving to teach finance at the University of Maryland.

Faulkender will be the fifth head of the IRS this year. Former IRS commissioner Danny Werfel departed in January, on Inauguration Day, after Trump announced in December he planned to name former Congressman Billy Long, R-Missouri, as the next IRS commissioner, even though Werfel’s term wasn’t scheduled to end until November 2027. The Senate has not yet scheduled a confirmation hearing for Long, amid questions from Senate Democrats about his work promoting the Employee Retention Credit and so-called “tribal tax credits.” The job of acting commissioner has since been filled by Douglas O’Donnell, who was deputy commissioner under Werfel. However, O’Donnell abruptly retired as the IRS came under pressure to lay off thousands of employees and share access to confidential taxpayer data. He was replaced by IRS chief operating officer Melanie Krause, who resigned last week after coming under similar pressure to provide taxpayer data to immigration authorities and employees of the Musk-led U.S. DOGE Service. 

Krause had planned to depart later this month under the deferred resignation program at the IRS, under which approximately 22,000 IRS employees have accepted the voluntary buyout offers. But Musk reportedly pushed to have Shapley installed on Tuesday, according to the Times, and he remained working in the commissioner’s office as recently as Friday morning. Meanwhile, plans are underway for further reductions in the IRS workforce of up to 40%, according to the Federal News Network, taking the IRS from approximately 102,000 employees at the beginning of the year to around 60,000 to 70,000 employees.

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Accounting

On the move: EY names San Antonio office MP

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Carr, Riggs & Ingram appoints CFO and chief legal officer; TSCPA hosts accounting bootcamp; and more news from across the profession.

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Accounting

Tech news: Certinia announces spring release

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Certinia announces spring release; Intuit acquires tech and experts from fintech Deserve; Paystand launches feature to navigate tariffs; and other accounting tech news and updates.

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