The IRS and DOJ Are Targeting Small Businesses, Construction Companies and Their Executives in 2026

The Internal Revenue Service (IRS) and U.S. Department of Justice (DOJ) are targeting small businesses, construction companies, and their executives in 2026. We have recently seen an increase in criminal tax fraud investigations targeting these taxpayers, with some leading to federal prosecution. As Virginia criminal tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, explains, avoiding prosecution in these cases requires an informed and strategic defense—and, for those that are not yet facing an investigation, proactively coming into compliance could be critical for avoiding unwanted scrutiny.

Understanding the Risks Involved in Facing an IRS or DOJ Criminal Tax Fraud Investigation

Facing an IRS or DOJ criminal tax fraud investigation presents substantial risks for small businesses, construction companies, and their executives. While the federal government has historically prioritized large-scale corporate tax fraud enforcement, it has recently shifted its focus to smaller businesses. This is likely due (at least in part) to two key factors: (i) the tax issues involved in these cases tend to be less complex, which means that they tend to be easier to prove; and (ii) proportionally, the stakes involved are significantly higher for small businesses than they are for large multi-billion-dollar corporations.

When pursuing criminal tax fraud charges, federal prosecutors often bring other white-collar charges as well. Nearly all of these charges carry the potential for six-figure or seven-figure fines, and executives can face substantial federal prison sentences as well. Some examples of potential charges in these cases include:

• Tax evasion (26 U.S.C. Section 7201)
• Tax fraud (26 U.S.C. Section 7206)
• Government fraud (18 U.S.C. Section 1031)
• Mail fraud and wire fraud (18 U.S.C. Sections 1341 and 1343)
• Money laundering (18 U.S.C. Section 1956)

Underreporting taxable income, fraudulently claiming business deductions, misclassifying employees as independent contractors, and numerous other issues can lead to these (and other) charges in the event of an IRS or DOJ investigation. As a result, when facing scrutiny, promptly executing a targeted defense strategy is critical, and targeted businesses and individuals must avoid mistakes (e.g., deleting or destroying relevant records) that could increase the risks involved.

Proactively Addressing Federal Tax Compliance Issues to Avoid IRS or DOJ Scrutiny

For those who are not yet facing an investigation, taking a proactive approach to achieving compliance could help them avoid unwanted scrutiny from the IRS and DOJ. Depending on the circumstances, this could involve making a voluntary disclosure. A cautious and strategic approach is required here as well—mistakes can prove very costly in this scenario.

Request a Confidential Consultation with Virginia Criminal Tax Attorney Kevin E. Thorn

If you need to know more about the IRS’ and DOJ’s ongoing efforts to target small businesses, construction companies, and their executives in 2026, we invite you to get in touch. To request a confidential consultation with Virginia criminal tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, please call 703-752-3752 or contact us online today.