The IRS is Following Through on Its Plan to Heavily Audit Businesses and High-Income Individuals in 2025

In May 2024, the Internal Revenue Service (IRS) announced plans to aggressively ramp up tax audits targeting businesses and high-income individuals. So far, it appears to be following through. We have seen a large number of audits targeting large corporations and wealthy taxpayers this year—a shift that is consistent with the IRS’ updated Strategic Operating Plan published last year. Learn more from Washington D.C. tax audit lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group:

IRS Working to Increase Corporate and High-Income Taxpayer Audits By “Sizable Percentages”

In its May 2024 announcement, the IRS stated that it “anticipate[d] increasing audits on the wealthiest taxpayers, large corporations and large, complex partnerships by sizable percentages” through the 2026 tax year. Specifically, it announced plans to:

• “[N]early triple audit rates on large corporations with assets over $250 million to 22.6%;”
• “[I]ncrease audit rates by nearly ten-fold on large, complex partnerships with assets over $10 million . . . to 1%;” and,
• “[I]ncrease audit rates by more than 50% on wealthy individual taxpayers with total positive income over $10 million . . . to 16.5% in tax year 2026.”

At the same time, the IRS also stated that it “will not increase audit rates” for small businesses and individuals making under $400,000—making clear that it intends to focus specifically on targeting large and high-income taxpayers.

Based on what we have seen so far, the IRS appears to be following through on its plans. We have seen several instances of large corporate taxpayers facing invasive IRS audits, and we have seen a high level of activity in high-income individual taxpayer audits as well.

What Does This Mean for You?

If your business is on the IRS’ radar, or if you personally are at increased risk of facing scrutiny due to the IRS’ ongoing efforts to target high-income taxpayers, what does this mean for you? Corporate and individual taxpayers who are at risk of facing invasive audits should:

• Assess the risk of facing liability for back taxes, interest ,and penalties in the event of an IRS audit;
• Work proactively to address any compliance concerns from 2025 or prior tax years; and,
• Begin gathering the documentation that will be necessary to withstand scrutiny from the IRS.

For businesses and high-income individuals that are at risk of facing additional liability, targeting a pre-audit resolution can substantially mitigate the risks involved. For those that are already facing scrutiny, mitigating the risks involved means engaging experienced tax counsel who can engage effectively with the IRS and target a resolution that avoids unnecessary adverse consequences.

Schedule a Consultation with Washington D.C. Tax Audit Lawyer Kevin E. Thorn

If you need to know more about the IRS’ ongoing efforts to target large businesses and high-income individual taxpayers, we encourage you to get in touch. To schedule a consultation with Washington D.C. tax audit lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, call 202-349-4033 or contact us confidentially online today.