Almost every week, I hear from taxpayers who fear losing their homes when they owe a tax debt. My answer is almost always the same: taxpayers do not commonly lose their homes over tax disputes.

But in the rare event when the government does take a home to collect a tax debt, the next question is just as important: what is the taxpayer owed after the property is sold? That question was at the center of a recent Supreme Court decision. In Pung v. Isabella County, the Court considered how much a government owes a former homeowner after it forecloses on a home for unpaid taxes and sells it at auction. The case follows the Court’s 2023 decision in Tyler v. Hennepin County, which made clear that the government can collect taxes, but it cannot use a tax debt as an excuse to keep more than it is owed.

This time, the Court ruled that when a tax sale is fairly conducted, the Constitution does not require the government to compensate the former owner based on the home’s fair market value. Instead, the baseline is the auction price less the tax debt. But the Court didn’t rule on whether the foreclosure and sale were fair in the first place–it sent the case back to the lower court to consider that question.

The Supreme Court was less eager to take up a different kind of fairness question: What happens when a taxpayer is left responsible for a fraudulent return prepared by someone else? In Murrin v. Commissioner, the Court declined to hear a case involving a taxpayer whose returns were prepared by a tax preparer who put false information on the returns with the intent to evade tax. The government did not allege that the taxpayer (Murrin) intended to evade tax, but still argued that the ordinary three-year assessment period did not apply because the returns—from 20 years prior—were fraudulent.

It leaves in place a Third Circuit ruling that gives the IRS a longer reach in some preparer-fraud cases. Under that ruling, a preparer’s intent to evade tax can be enough to keep the statute of limitations open, even if the taxpayer did not personally commit fraud. The result is a hard one for taxpayers since, under that ruling, the tax consequences of someone else’s misconduct can follow them for years—or even decades.

Tax preparers were also in the news this week after the IRS Office of Professional Responsibility issued new guidance on the use of AI in tax practice. According to OPR, tax professionals can use AI to make their practices more efficient, but they still have to exercise judgment, protect client information, and comply with Circular 230.

Firms also need policies covering which AI tools are approved, what client information may be entered, how AI-generated work is reviewed, and how clients are billed. AI can make tax practice more efficient, but it does not shift responsibility away from the tax professional to put in the work.

Of course, it’s no secret that the IRS is using technology, too. The agency has been rolling out chatbots, voice bots, and live chat tools to make it easier for taxpayers to resolve routine tax problems. But according to a recent Treasury Inspector General for Tax Administration report, the IRS expanded those tools before it had reliable data showing whether they were actually working.

What TIGTA was able to piece together was not reassuring. Of 635,684 reported live chats, only 290,181—or 46%—were classified as resolved. TIGTA also found that IRS chatbots struggled with keyword recognition (for example, the chatbot didn’t recognize “debit card”). In some cases, it returned incomplete answers, broken links, or even computer programming code instead of helpful responses.

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