IRS Audit Rates Are Increasing—Are You (or Is Your Business or Partnership) At Risk in 2026?

Facing an Internal Revenue Service (IRS) audit can present substantial risks. Along with liability for unpaid taxes, targeted businesses, partnerships and individuals can also face liability for interest and penalties. With audit rates increasing heading into 2026, it is critical for at-risk taxpayers to ensure that they are prepared. Learn more from Virginia tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group:

Businesses, Partnerships and Individuals that Are in the IRS’ Crosshairs

While the IRS is auditing all types of taxpayers, it has recently placed particular emphasis on targeting taxpayers in certain industries and occupations. For taxpayers in these industries and occupations, it will be especially important to ensure that they are prepared to withstand IRS scrutiny if necessary. Current priority enforcement areas for the IRS include:

• Cannabis
• Construction and real estate development
• Cryptocurrency
• Gaming and gambling
• Government contracting and government-funded healthcare
• Financial services
• Importing and exporting
• Professional services
• Professional sports
• Technology

The IRS is targeting taxpayers in these (and other) industries and occupations located both in the U.S. and abroad. For all domestic and international taxpayers, facing an IRS audit presents similar risks (though the amount at stake varies from case to case), and this makes it imperative to execute an informed, proactive and strategic defense.

Addressing the Risks of Facing an IRS Audit in 2026

With this in mind, what should businesses, partnerships and individuals do to address the risks of facing an IRS audit in 2026? Some examples of key risk mitigation measures include:

• Assessing (or Reassessing) Federal Tax Compliance – All U.S. taxpayers need to be confident in their compliance records. If you are not confident in your (or your business’s or partnership’s) compliance record, you should promptly determine if any action is required.
• Proactively Resolving Any Outstanding Tax Issues – If action is required, you should work proactively to resolve any outstanding tax issues before they trigger an IRS audit. From submitting an amended return to submitting a voluntary disclosure, what this entails will depend on the circumstances at hand.
• Gathering Documentation of Compliance – When facing an IRS audit, it is critical to be prepared to affirmatively demonstrate compliance. Affirmatively demonstrating compliance requires documentation that substantiates the contents of taxpayers’ returns.
• Knowing How to Respond to an IRS Audit – Regardless of compliance, when facing an IRS audit, an effective response is essential. For an overview of key preliminary steps, you can read our article on responding to an IRS audit.
• Engaging Experienced Tax Counsel – Whether you have concerns about compliance or you have received an audit notice from the IRS, engaging experienced tax counsel is essential. If you have questions or concerns, we strongly recommend scheduling an appointment as soon as possible.

Schedule an Appointment with Virginia Tax Attorney Kevin E. Thorn

If you would like to schedule an appointment with Virginia tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, we invite you to get in touch. To discuss your (or your business’s or partnership’s) situation in confidence, call 703-752-3752 or tell us how we can help online today.