Parkland, Fla. – MARCH 24, 2026 – Tax professionals warn that IRS enforcement activity may grow in 2026. The U.S. Internal Revenue Service (IRS) is continuing its push to create better compliance systems, enhance its audit targeting systems and fill the “federal tax gap.” The tax gap represents the difference between the amount of taxes owed by the public and the amount of taxes paid.
The IRS pays approximately 96 percent of the total federal revenue. Economists believe the tax gap is more than $700 billion per year. Most of this tax gap results from taxpayers failing to accurately report their income, including most of the time as a result of unreported income from business owners and pass-through entities; other times because of complicated income streams from investments.
Tax professionals believe these enforcement activities could lead to more scrutiny on taxpayers who have un-filed tax returns; have unpaid tax amounts due; or have reported their income incorrectly.
“Most people think that only big corporations get audited,” said Rona Durandisse, EA, Principal at Ultra Care Tax, a tax resolution company based in Coral Springs, FL. “But the truth is that many small businesses and self-employed individuals receive enforcement actions from the IRS.”
As compliance systems continue to evolve, so does the attention from the IRS toward taxpayers who have filed their tax returns incorrectly or have un-filed tax returns.
IRS Modernization and Compliance Initiatives
Over the last decade the IRS has been working to restore its ability to enforce tax laws. Over the last few years, the IRS has attempted to modernize its systems and build back its enforcement capabilities. The IRS received an additional $80 billion from the Inflation Reduction Act to improve its enforcement and to provide taxpayer services.
Part of the money provided to the IRS to support its mission was used to strengthen the IRS’ audit and investigation divisions to focus on high-income earners and large corporations. However, part of the money provided to the IRS has been cut back through Congressional rescissions. As a result, the IRS now has to find a way to meet its modernization objectives while dealing with the reduction in staff and budgets.
The IRS strategic operational plan calls for a larger number of audits on high-income individuals and large corporations. Specifically, audits on individuals who earn more than $10 million are expected to grow from approximately 11 percent in 2019 to about 16.5 percent in 2026. The IRS also plans to use more data analysis and automated compliance systems to compare taxpayer-reported income to information reported by third parties. These programs are designed to help identify discrepancies in income reported to the IRS and that reported to third parties.
Changes to Staffing and Enforcement Strategies
In addition to implementing new systems and programs to modernize its enforcement capability, the IRS is also restructuring its internal organization. The National Taxpayer Advocate’s 2025 Report to Congress states that the IRS workforce decreased by approximately 27 percent from 102,000 employees to approximately 74,000 employees in 2025. The decrease in staffing may limit the IRS ability to provide full-service taxpayer assistance in all areas. Analysts believe the IRS will turn to automated compliance systems and correspondence audits, where the IRS reviews returns through mailed documentation request instead of in-person audits.
Less than one percent of individual tax returns are audited. However, if you have a complicated filing or business income, or have taken a very large deduction, your chances of being audited are much greater. Correspondence audits, which are conducted via mail and do not require the IRS to interact with the taxpayer personally, have become more prevalent. This method requires fewer personnel resources.
Reasons for Common IRS Audits
- When a taxpayer fails to report income and that income appears to be missing from the taxpayer’s reported income as evidenced by third-party documents such as W-2s or 1099s
- When a taxpayer reports a very large deduction compared to his/her income, specifically when that deduction relates to Schedule C business income
- When a taxpayer repeatedly incurs a net loss from a business and that loss is potentially characterized as a hobby
- When a taxpayer fails to report cryptocurrency transactions
- When a taxpayer fails to report foreign assets or incorrectly reports the value of those assets
The IRS uses automated document matching systems to identify inconsistencies between taxpayer filings and data reported by third parties, such as employers, banks and payment processors.
Closing the Tax Gap
Efforts to collect taxes from the public are generally described in terms of closing the tax gap. Closing the tax gap refers to the difference between the total amount of taxes owed and the actual total amount of taxes collected. Research suggests that the IRS receives a strong return on every dollar invested in tax enforcement. Historically, for example, every additional dollar invested in tax enforcement has resulted in several dollars of additional tax collections.
Improved enforcement also leads to increased voluntary compliance. When taxpayers realize that their chance of being audited is increasing, they are more likely to file their tax returns correctly.
What Taxpayers Can Do Today
Tax professionals agree that the best defense against IRS enforcement is pro-active compliance.
“If you have unfiled tax returns or outstanding tax debt, addressing them before they become more serious is key,” said Durandisse. “Installment agreements, penalty abatements, and negotiated settlements can all assist in resolving tax debt before enforcement action is taken. Such action can result in a lien, levy on wages, levy on a bank account, etc. Early intervention can greatly reduce the risk of taking these types of actions.”
About Ultra Care Tax
Ultra Care Tax provides tax resolution services to individuals and businesses facing IRS collection actions, audits, and unresolved tax liabilities.
The firm specializes in:
- IRS audit representation
- Installment agreements
- Offer in compromise negotiations
- Penalty abatement
- Wage garnishment and levy relief
Ultra Care Tax serves taxpayers nationwide from its Coral Springs, Florida office.
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