The IRS is Ramping up Tax Audits
Wealthy individuals, large corporations and partnerships are all audit targets, thanks in large part to the IRS's multi-billion dollar windfall.


Getting the right tax advice and tips is vital in the complex tax world we live in. The Kiplinger Tax Letter helps you stay right on the money with the latest news and forecasts, with insight from our highly experienced team (Get a free issue of The Kiplinger Tax Letter or subscribe). You can only get the full array of advice by subscribing to the Tax Letter, but we will regularly feature snippets from it online, and here is one of those samples…
The IRS is ramping up its enforcement efforts in large part due to its spending windfall. In 2022, lawmakers promised the agency $80 billion, to be spread out over 10 years. This is in addition to the IRS’s regular annual funding. Over half the money is for increased enforcement and collection measures.
This year, Congress clawed back 25% of the funding. Last year, the IRS released its operating plan, discussing what it would do with the extra money. On enforcement, the IRS said it would do more audits of big C corporations and partnerships, individuals with high income or high wealth, cross-border activities, digital currency and more.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The IRS has now updated that plan, giving a more specific audit roadmap. Large corporations would see their audit rates skyrocket under the IRS’s plan. The overall audit rate for 2019 C corporation Form 1120 tax returns was 0.4%, while C corps reporting $250 million or more in assets had a nearly 9% audit rate. The IRS wants to raise that 9% figure over time until it reaches 22.6% for 2026 returns. Expect audit rates of C corps with less than $250 million in assets to also go up.
Audit coverage of large partnerships and S corporations would increase to 1%. This number might seem small, but considering that for several years the audit rate for partnerships and S corps has hovered around 0.1%, it really is a sizable jump. The IRS’s updated plan projects that audit rates for pass-through entities with $10 million or more in assets would rise until they reach 1% for 2026 Forms 1065 and 1120-S.
Wealthy individuals with lots of income would also feel more audit heat. The IRS’s overall audit rate for 2019 individual returns was 0.3%. But individuals reporting $1 million or more of income had a higher audit rate: 11% for 2019 returns reporting $10 million or more of income, 3.1% for returns with income of over $5 million and under $10 million, and 1.6% for returns reporting income between $1 million and $5 million. The IRS wants to raise the 11% figure for people with $10 million or more of income to 16.5% for 2026 Form 1040s. Other high-incomers will see more audits, too. The IRS will also use its regular annual funding to do audits of other individuals, as it has in the past.
The IRS pledges to not hike audit rates for taxpayers earning $400,000 or less. More specifically, the agency vows that individuals and small businesses with earnings of $400,000 or less will not see more audits when compared with historic rates. It is our understanding that this applies only to taxpayers with total positive incomes up to $400,000, meaning income before taking losses and deductions on the return. Also, according to the IRS commissioner, the audit rate on 2018 returns will be used for the purpose of the historic rate comparison. The overall audit rate for 2018 returns was 0.3% for individuals, 0.6% for C corps and 0.1% for partnerships and S corps.
This first appeared in The Kiplinger Tax Letter. It helps you navigate the complex world of tax by keeping you up-to-date on new and pending changes in tax laws, providing tips to lower your business and personal taxes, and forecasting what the White House and Congress might do with taxes. Get a free issue of The Kiplinger Tax Letter or subscribe.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Joy is an experienced CPA and tax attorney with an L.L.M. in Taxation from New York University School of Law. After many years working for big law and accounting firms, Joy saw the light and now puts her education, legal experience and in-depth knowledge of federal tax law to use writing for Kiplinger. She writes and edits The Kiplinger Tax Letter and contributes federal tax and retirement stories to kiplinger.com and Kiplinger’s Retirement Report. Her articles have been picked up by the Washington Post and other media outlets. Joy has also appeared as a tax expert in newspapers, on television and on radio discussing federal tax developments.
-
Ten Cheapest Places To Live in Florida
Property Tax Make your Florida vacation spot daily living — these counties have the lowest property tax bills in the state.
By Kate Schubel
-
I'm 50 and my home is worth $5 million. Can I retire now?
It may be oh-so tempting to cash out your upscale home and leave work for good. But should you? We ask the experts.
By Maurie Backman
-
Should You Do A Roth IRA Conversion? Nine Things to Consider
The Tax Letter Thinking of converting a traditional IRA to a Roth IRA? The Kiplinger Tax Letter Editor highlights nine factors you should consider before making a move.
By Joy Taylor
-
Ask the Editor: Reader Questions, April 18 — Amended Returns
In our Ask the Editor: Taxes, April 18, round-up — Joy Taylor, The Kiplinger Tax Letter Editor, answers questions on amended returns, mortgages and deductions.
By Joy Taylor
-
How Many IRS Commissioners Have We Gone Through This Year?
IRS Who were the former IRS commissioners, and why did they resign? Find out how IRS turnover can impact your taxes.
By Kate Schubel
-
Tax Day 2025: Don’t Miss These Freebies, Food Deals and Discounts
Tax Day You can score some sweet deals on April 15 in some select restaurants like Burger King, Shake Shack, and more.
By Gabriella Cruz-Martínez
-
Tax Time: Does Your Kid Influencer Owe Taxes?
State Tax Some minors are making big money on social media. Here’s how to know if they need to file taxes.
By Gabriella Cruz-Martínez
-
Ask the Editor: Reader Questions, April 11 — IRAs, RMDs and PTPs.
Ask the Editor: Taxes, April 11, 2025 — Joy Taylor, The Kiplinger Tax Letter Editor, answers questions on Roth IRAs, RMDs and other retirement accounts.
By Joy Taylor
-
Trump Plans to Terminate IRS Direct File program
Tax Filing The IRS Direct File program was piloted last year in 12 states and has since expanded to 25. But will it last under the Trump administration?
By Gabriella Cruz-Martínez
-
Ask the Editor: Reader Questions, April 4 — The Tax Bill
Ask the Editor: Taxes, April 4 — Joy Taylor, The Kiplinger Tax Letter Editor, answers questions on Trump's tax package, estate tax and Muni bonds.
By Joy Taylor