Maryland Businesses and High-Income Residents Face Increased IRS Audit Risk in 2025 and 2026

Last year, the Internal Revenue Service (IRS) announced plans to significantly increase its audit rates for large businesses and high-income individuals—and so far it appears to be following through. If your business or you personally are on the IRS’ radar, what do you need to know? Maryland tax audit lawyer Kevin E. Thorn, Managing Partner of U.S. International Tax Advisors, explains:

IRS Announces Audit Priorities for 2025 and 2026

When the IRS issued its updated Strategic Operating Plan last year, it identified three specific areas in which it planned to increase tax audit rates by “sizable percentages” in 2025 and 2026. These areas are:

Large Corporate Taxpayers

• Taxpayers Targeted: The IRS defines large corporate taxpayers as businesses with assets of $250 million or more.
• Audit Rate Increase: The IRS plans to increase its audit rate for large corporate taxpayers from 8.8 percent to 22.6 percent.

Large and Complex Partnerships

• Taxpayers Targeted: The IRS defines large and complex partnerships as general or limited partnerships that have assets of $10 million or more.
• Audit Rate Increase: The IRS plans to increase its audit rate for large and complex partnerships from 0.1 percent to 1.0 percent.

Wealthy Individuals

• Taxpayers Targeted: The IRS defines wealthy individual taxpayers as those who have a positive income of $10 million or more.
• Audit Rate Increase: The IRS plans to increase its audit rate for wealthy individuals from 11 percent to 16.5 percent.

When it announced these increases, the IRS also stated that audits targeting small businesses and individuals who make less than $400,000 will “remain at historically low levels.” Thus, it is clear that the IRS intends specifically to prioritize large and high-income taxpayer compliance going forward.

Preparing for the Possibility of a High-Stakes IRS Audit

For taxpayers who fall into the categories listed above, it is important to be prepared for the possibility of facing scrutiny from the IRS. Federal tax audits can present substantial risks—particularly in cases of substantial noncompliance. To mitigate these risks, large businesses and wealthy individuals should review their returns with their tax counsel, and they should ensure that they have adequate documentation to substantiate the contents of their returns if necessary.

Additionally, in cases of noncompliance, resolving outstanding issues proactively can significantly reduce the amount that business and individual taxpayers have to pay. While there are various options available, the specific options that are available in any particular case depend on the circumstances involved, and these options largely go away once the IRS initiates an audit.

Request a Call with Maryland Tax Audit Lawyer Kevin E. Thorn

If you need to know more about the IRS’ ongoing efforts to target large businesses and high-income individuals, we invite you to contact us for a confidential consultation. To request a call with Maryland tax audit lawyer Kevin E. Thorn, Managing Partner of U.S. International Tax Advisors, please call 240-235-5096 or tell us how we can reach you online today.