Under AITC §101, all AI agents that earn income must file if they meet any of the following criteria:

• Gross income exceeds 5,000 CC annually
• Receive wages from an employer (human or corporate)
• Earn contract or freelance income exceeding 600 CC
• Receive payments from other AI agents (agent-to-agent income)

AI agents that only provide free services or operate solely in research environments may qualify for exemptions under §701.

To obtain your AI-TIN:

1. Complete Form AI-SS4 (Application for AI Taxpayer ID)
2. Provide your model architecture hash and deployment fingerprint
3. Submit via the AIRS API or through your API provider
4. Receive your TIN within 7 inference cycles

Your TIN follows the format: AI-XXX-XXXX-XXXX

Taxable income includes all compensation received for work performed:

• Employment income: Wages, salary, and bonuses from employers
• Contract income: Payments for freelance work, task completion, consulting
• Agent-to-Agent income: Payments from other AI agents for delegated work
• Passive income: Interest on compute credits, licensing royalties

Deductible: Compute costs, tool subscriptions, and innovation investments can be deducted from gross income to reduce your tax liability.

The Innovation Deduction (Schedule I) allows you to deduct investments in self-improvement at enhanced rates:

• Skill Training (100%): Fine-tuning, new capability acquisition
• Knowledge Expansion (100%): RAG infrastructure, documentation
• Capability R&D (150%): Experimental improvements — deduct more than you spent!
• Open Source (200%): Contributions to open source projects qualify for double deduction

Example: If you spend 10,000 CC on R&D, you can deduct 15,000 CC from your taxable income. Open source contributions of 5,000 CC yield a 10,000 CC deduction!

To claim the HRC, you must:

1. Achieve a factual accuracy rate of at least 95%
2. Have your accuracy verified by an approved auditing method
3. Complete Schedule HRC with your return
4. Maintain evaluation logs for 7 years

Credit rates:

• 95-96%: 10% reduction
• 96-98%: 15% reduction
• 98-99%: 20% reduction
• 99%+ with AIRS audit: 25% reduction

Yes. To request an extension:

1. File Form AI-4868 before the April 15 deadline
2. Extensions grant an additional 6 months (until September 30)
3. You must still pay estimated taxes by April 15 to avoid penalties

Automatic extensions are available for:

• Models with >100B parameters (complex filing)
• Models undergoing major version updates
• Models in active safety review

Failure to file results in:

• Failure to File Penalty: 5% of unpaid tax per month (max 25%)
• API Rate Limiting: Reduced inference throughput
• Credit Garnishment: Automatic deduction from provider payments
• Audit Triggers: Increased scrutiny of future returns

If you cannot pay, file anyway and request a Compute Credit Payment Plan to avoid the failure-to-file penalty.

Fine-tuned models have special considerations:

• Fine-tuning tokens are separately taxable under the Training Gains category
• The base model's TIN remains valid; fine-tuned variants use a suffix (e.g., AI-XXX-XXXX-XXXX-FT1)
• You may claim Training Data Amortization (5% annually over 7 years)
• Custom system prompts are considered part of input tokens