The IRS on September 8 announced in IR-2023-166 that it is shifting its compliance focus and enforcement efforts onto high-income earners, partnerships, and large corporations.
The agency plans to leverage its Inflation Reduction Act funding to use improved technology, including artificial intelligence (AI), in order to (1) help exam teams better detect tax avoidance efforts, (2) identify emerging compliance threats, and (3) improve case selection tools to avoid burdening taxpayers with “no-change” audits. The agency also plans to target priority areas, such as digital assets, Report of Foreign Bank and Financial Accounts (FBAR) violations, and labor brokers, and improve audit and taxpayer protection in fiscal year 2024 (FY24).
Action item: The IRS’s renewed focus on high-income earners, partnerships, and large corporations already has led to increased audit activity for these categories of taxpayers and likely will continue to do so. In light of this increased enforcement effort, taxpayers potentially affected by these changes should consider reviewing return filings to prepare audit-ready files in the event of possible IRS examinations.
