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Prepare For The IRS Audit Surge!

Updated: Jul 10


IRS plans to increase audits for big corporations, partnerships, and multimillionaires after a funding boost from the Biden administration.
Prepare For The IRS Audits Surge

The IRS is ramping up its audit rates for large corporations, complex partnerships, and multimillionaires, thanks to a substantial funding boost from the Biden administration. By 2026, audit rates for corporations with over $250 million in assets will nearly triple, while complex partnerships and high-income individuals will also see significant increases. Despite these changes, the IRS reassures that individuals and small businesses earning under $400,000 won't face increased audit rates. This new focus underscores the importance of robust tax compliance and expert guidance.


Massive Funding Boost

  • The IRS received a significant increase in funding from the Biden administration.

  • Funding came through the Inflation Reduction Act (IRA) signed into law in 2022.

  • $80 billion directed to the IRS.


Increased Audit Rates for Corporations

  • Goal: Nearly triple the audit rate to 22.6% by 2026.

  • Applies to corporations with over $250 million in assets.

  • Current audit rate: 8.8% in 2019.


Focus on Complex Partnerships

  • Target: Increase audit rates nearly 10-fold to 1% by 2026.

  • Applies to partnerships with assets exceeding $10 million.

  • Current audit rate: 0.1% in 2019.


Targeting Wealthy Individuals

  • Aim: 50% increase in audit rates for individuals with annual income over $10 million.

  • Expected audit rate: 16.5% by 2026.

  • Current audit rate: 11% in 2019.


Assurance for Lower-Income Entities

  • No increase in audit rates for individuals and small businesses earning under $400,000.

  • Aligns with President Biden’s pledge not to raise taxes on this population.


Audit Process

  • Involves meeting with an auditor to review the federal tax return.

  • Auditor may request additional documentation to support claims.

  • Discrepancies can lead to:

  • Tax evasion charges.

  • Civil fraud penalty of 75% of the understated tax.

  • In severe cases, jail time.


This detailed audit plan reflects the IRS's enhanced capacity to scrutinize high-value entities, backed by significant federal support.


To navigate the increasing scrutiny and complex tax landscape, retaining Mark Sullivan Consulting is essential. Our expertise in IRS audits and tax controversy will ensure your interests are protected. With personalized strategies and a deep understanding of federal tax laws, we provide unparalleled support and peace of mind. Trust us to be your steadfast ally in all tax matters.


Request a free consultation HERE with Mark W. Sullivan, EA .


About the author

Mark W. Sullivan, EA founded Sullivan Consulting in 1998. He specializes in federal tax controversy representation, appeals and consulting on behalf of individuals, businesses, law, and accounting firms nationwide. In addition, he has served as the consulting and expert witness in numerous civil and criminal cases in multiple federal district courts.

Mark has an unlimited Enrolled Agents license and is admitted to practice before the Internal Revenue Service based on his extensive experience as a Revenue Officer in New York, NY, St. Louis, MO and Washington, D.C.

 

Copyright 2024


Mark Sullivan Consulting, PLLC.


Disclaimer: This article is for information purposes only and cannot be cited as precedent or relied upon in a tax dispute before the IRS.


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