The IRS is Ramping Up Its Auditing Efforts Heading Into 2026

The IRS is ramping up its auditing efforts heading into 2026. We have recently seen a substantial uptick in audits targeting both individuals and businesses. This includes corporate executives, licensed professionals, professional athletes, construction companies, financial services companies and technology companies (among others) in the U.S. and abroad. Are you (or is your business) at risk of facing an IRS audit in 2026? If so, what do you need to know? Boston tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, explains.

Common Issues in IRS Audits

Numerous issues can expose taxpayers to liability for additional taxes, interest and penalties during an IRS audit. Ultimately, if an individual or business taxpayer has underreported or underpaid its federal tax liability for any reason, this can have serious financial consequences once the IRS opens an inquiry. With this in mind, some examples of common issues that we are seeing come up in IRS audits include:

• Underreporting individual income or business income
• Reported income that is inconsistent with W-2s, 1099s and other third-party forms
• Questionable credits and deductions (including home office and business expense deductions)
• Questionable losses used to offset substantial income
• Income from gaming and gambling activities or operations
• Income from cannabis operations
• Income from cryptocurrency investing and IPOs
• Complex tax shelters and tax avoidance schemes
• Undisclosed offshore accounts and other foreign financial assets
• Pandemic-era fraud (Paycheck Protection Program (PPP) and Employee Retention Credit (ERC) fraud)

These issues—among many others—can expose individuals and businesses to substantial liability; and, once the IRS decides to seek penalties, avoiding additional liability can be an uphill battle. However, all U.S. taxpayers have clear legal rights, and this includes the right to challenge the IRS’saudit practices and assumptions both during the audit process and after the audit process if necessary.

What You Need to Know if You Receive an IRS Audit Notice

So, if you receive an audit notice from the IRS, what do you need to know? More importantly, what do you need to do in this scenario in order to protect yourself or your business? When facing an IRS audit, it is important to:

• Prioritize the Audit – An IRS audit is not something you can ignore. To avoid unnecessary consequences, you will need to prioritize the audit, and you will need to proactively engage with the IRS.
• Conduct a Comprehensive Risk Assessment – To engage with the IRS effectively, you will need to know what (if anything) revenue agents may uncover during the audit process.
• Engage Experienced Defense Counsel – From conducting a comprehensive risk assessment to exposing flaws in the audit process and negotiating with the IRS (if necessary), all aspects of the audit process require experienced representation.

Schedule a Call with Boston Tax Attorney Kevin E. Thorn

If you need to know more about how to respond effectively to an IRS audit, we encourage you to contact us promptly. To schedule a call with Boston tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, call 617-692-2989 or contact us online today.