IRS and DOJ Ramp Up Efforts to Target Small Businesses, Construction Companies and Their Executives

The Internal Revenue Service (IRS) and U.S. Department of Justice (DOJ) have been ramping up their efforts to target small businesses, construction companies, and their executives in criminal tax fraud investigations. We have seen an increase in these cases in 2026, with businesses and their executives facing a wide range of federal criminal allegations. Learn more from Washington D.C. business tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group:

Small Businesses and Construction Companies Are Facing Scrutiny for Income and Payroll Tax Violations

The IRS and DOJ are targeting small businesses and construction companies suspected of committing willful income and payroll tax violations. Willfulness is the key distinction between criminal and civil tax law violations in most cases, and the federal government has been prioritizing criminal enforcement in recent months. Some examples of potential allegations in these cases include:

• Underreporting business income
• Improperly claiming business deductions
• Improperly claiming business credits and exemptions
• Misclassifying employees as independent contractors
• Failing to timely remit payroll taxes withheld from employee compensation

These issues, among others, can expose small businesses and construction companies to substantial penalties. In criminal cases, the DOJ will typically pursue a wide range of charges—including not only tax-specific charges under the Internal Revenue Code (IRC) but also money laundering, wire fraud, and other federal white-collar crimes.

Executives Are Facing Scrutiny as Well

As noted above, in addition to targeting small businesses and construction companies, the IRS and DOJ are targeting these companies’ executives in criminal tax fraud investigations. This includes targeting executives for their role in perpetrating corporate income and payroll tax fraud schemes as well as individual income tax offenses. This includes (but is not limited to) common allegations such as:

• Underreporting individual income
• Improperly claiming home office and personal vehicle deductions
• Writing off personal expenses as business expenses
• Using fraudulent tax shelters to evade federal tax liability
• Failing to properly disclose offshore bank accounts

These charges can lead to substantial penalties, including fines and federal prison time. The DOJ has shown that it is more than willing to pursue prison time for small business and construction company executives when incarceration is provided for by statute. As a result, when facing scrutiny—whether at the business or individual level—executives need to prioritize their defense. This starts with engaging experienced defense counsel who can promptly assess their risk exposure, build a tailored defense strategy, and communicate effectively with the IRS and DOJ on their behalf.

Request an Appointment with Washington D.C. Business Tax Attorney Kevin E. Thorn

If you have concerns about facing scrutiny related to your small business’s or construction company’s federal tax liability (or if you are currently facing scrutiny from the IRS or DOJ), we encourage you to contact us promptly. To request an appointment with Washington, D.C. business tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, call 202-349-4033 or contact us confidentially online today.