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ASK THE CALIFORNIA EMPLOYMENT TAX AND PAYROLL TAX ATTORNEY – NEW IRS AUDIT TARGETS FOR 2024 AND BEYOND

By Robert S. Schriebman

2024

Introduction

It is widely known that the IRS has received billions of dollars of funding for modernization as well as new targets for audits and assessments. Last year the GAO published its findings that the IRS historically has ignored the big guy and has concentrated its audit’s efforts on the little guy and the small businessperson. The IRS did not like the spotlight shined on it by the GAO. And reacted by assuring the public that the agency will not increase audit rates for small businesses and taxpayers making under $400,000.

The new targets will be large corporations, crypto currency, and complex partnerships. The goal is to increase these audits substantially starting with the 2026 filing season.

The IRS anticipates increasing audits on the wealthiest taxpayers, large corporations, and large, complex partnerships by a sizeable percentage.

Here is the IRS’ Strategic Plan directly from the horse’s mouth:

  • The plan highlights the IRS will nearly triple audit rates on large corporations with assets over $250 million to 22.6% in tax year 2026, up from 8.8% in tax year 2019.
  • The IRS will increase audit rates by nearly ten-fold on large, complex partnerships with assets over $10 million, going from 0.1% in 2019 to 1% in tax year 2026.
  • The IRS will increase audit rates by more than 50% on wealthy individual taxpayers with total positive income over $10 million, with audit rates going from an 11% coverage rate in 2019 to 16.5% in tax year 2026.

Conclusion

With all the new goals and new targets for IRS audits, you might ask what the probability would be of the IRS auditing you or your small business. In my opinion, the odds have not changed since I started practicing tax law decades ago. It makes no sense to play the odds and to take risks. If the IRS elects to audit you, the odds are still 100%.

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Robert Schriebman has a successful practice in the Rolling Hills Estates area of Los Angeles County serving clients throughout California and the United States. He has successfully dedicated more than 50 years to helping individual taxpayers, business owners, CPAs, Enrolled Agents, and tax attorneys navigate the complicated tax systems of the federal and state governments. Mr. Schriebman is in private practice. He is not affiliated in any way with the EDD, and he is not employed by the EDD or any other agency of the State of California.

Robert Schriebman has written the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.

Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House.

Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House in addition to the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.