IRS AUDITS FOR THE WEALTHY ARE ABOUT TO GO CRAZY

🚨 Accountants Alert: The IRS is gearing up for a major overhaul in tax enforcement, targeting the wealthy and large corporations. By 2026, audits for households with incomes above $10 million will increase by 50%, and corporate audits are expected to almost triple.

If you're an accountant, and you serve high-income taxpayers, this is what you need to know to keep your clients in compliance.

Introduction

As an attorney specializing in IRS and state tax debt, I closely track IRS policy changes to help my clients. The IRS has outlined a significant expansion in its audit activities among the wealthiest taxpayers and major corporations.

Understanding these changes is crucial for accountants who advise high-income clients.

Why This Matters

The IRS is returning to more stringent enforcement levels last seen over a decade ago before staff and funding reductions.

This renewed focus on high-income earners and corporations signals a more aggressive approach to tax collection, which will have a significant impact on the accounting profession.

1.Increased Audits for High-Income Households:

The IRS is aiming for a 50% increase in audits for individuals with incomes exceeding $10 million. The planned 50% increase in audits for households earning over $10 million requires accountants to focus on careful record-keeping and proactive tax planning to avoid potential audits.

2. A Sharp Rise in Corporate Audits:

Corporate audit rates will almost triple, with the IRS aiming to audit over 22% of tax returns from corporations with assets above $250 million.

The IRS’s focus on large corporations will require businesses to maintain detailed financial records and be prepared for in-depth audits.

Help your clients understand the increased scrutiny they're going to face and advise them on how to prepare for it.

3. If you owe under $400,000, audit rates will not increase…or so they say.

In the midst of a congressional fight over the Inflation Reduction Act funding, the Treasury Department made it clear that the IRS is not to increase audit rates for taxpayers making under $400,000.

Instead, the focus is supposed to be on the top of the income distribution — let’s see if this holds true.

4. More IRS Personnel and Resources:

With increased funding from the Inflation Reduction Act, the IRS plans to boost its workforce to around 102,500 by the end of the decade in order to ensure compliance moving forward.

Accountants need to stay updated on regulatory changes, compliance guidelines, and enforcement updates to guide their clients.

5. Aggressive Enforcement of Tax Collection:

The IRS is increasing its efforts to collect unpaid taxes, especially from high earners, sending more than 125,000 notices to households earning above $400,000.

My practice is busier than it’s been in 3 years.

Accountants need to ensure their clients pay their taxes when they owe but if they can’t, make sure they get the professional help they need from a tax professional with tax debt expertise.

TL;DR - Too Long; Didn’t Read

The IRS is ramping up its audits on high-income individuals and large corporations. With increased funding and personnel, accountants must ensure their clients are ready for this heightened scrutiny.

Accountants:

Have you seen an uptick in clients who’ve been targeted for collections?

Have audits already started to increase within your practice?

Let me know in the comments.

As always, with immense gratitude, I thank you for continuing to support weekly installments of the Resolving Tax Debts newsletter!