IRS Audits Are on the Rise in 2025: What Business Owners and High-Income Individuals in Virginia Need to Know

IRS audits are on the rise. Consistent with plans the IRS announced last year, we are seeing a high level of audit activity in cases involving large businesses and high-income individuals. Learn more from Virginia tax audit lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group:

IRS Announces Plan to Target Businesses and High-Income Individuals

On May 2, 2024, the IRS announced that it would be ramping up audits targeting large businesses and high-income individuals by “sizable percentages” in 2025 and 2026. Specifically, it announced plans to:

• Nearly triple audits targeting large corporations (those with assets over $250 million);
• Increase audits targeting large, complex partnerships (those with assets over $10 million) by nearly tenfold; and,
• Increase audits targeting high-income individuals (those who earn $10 million or more) by more than 50 percent.

At the same time, the IRS also announced that tax audits targeting smaller businesses and lower-income individuals would “remain at historically low levels.” In doing so, the IRS signaled its clear intent to prioritize large business and high-income taxpayer compliance going forward.

IRS Follows Through on Plan to Target Businesses and High-Income Individuals

So far, the IRS appears to be following through on the plans it announced last year. Several high-stakes tax audits targeting large businesses and high-income taxpayers are underway, and in addition to pursuing civil penalties, the IRS is also pursuing criminal enforcement in some cases.

What Can (and Should) At-Risk Taxpayers Do To Prepare?

With this in mind, what can (and should) at-risk taxpayers do to prepare for the possibility of facing IRS scrutiny in 2025 or 2026? Some of the preliminary steps businesses and high-income individuals can take to protect themselves include:

Conduct an IRS Audit Risk Assessment

Businesses and high-income individuals that are at risk of facing IRS scrutiny should engage tax counsel to conduct an attorney-client privileged audit risk assessment. This will allow for informed decision-making going forward.  

Locate and Preserve Substantiating Documentation

Along with assessing their risk, taxpayers who are at risk of facing IRS scrutiny should also ensure that they have ready access to the substantiating documentation they will need to respond to an IRS audit if necessary.

Take Proactive Steps to Address Noncompliance  

For those who are at risk of facing liability for back taxes, interest, and penalties, taking proactive steps to address their noncompliance (before the IRS initiates an audit) could substantially mitigate the costs of any past filing mistakes.

Request an Appointment with Virginia Tax Audit Lawyer Kevin E. Thorn

Again, these are just some of the preliminary steps involved in mitigating companies’ and individuals’ risk of facing high-stakes IRS tax audits. If you need to know more about what you can (and should) be doing to protect your business or yourself, we invite you to get in touch. To request an appointment with Virginia tax audit lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, please call 703-752-3752 or contact us confidentially online today.