2024 Financial Report Highlights the IRS’ Ongoing Enforcement Priorities

The Internal Revenue Service (IRS) recently released its Financial Report for the 2024 fiscal year. The 2024 Financial Report highlights the agency’s enforcement efforts over the past year and, in doing so, provides insight into its enforcement priorities heading into 2025. As Boston tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, explains, understanding the IRS’ enforcement priorities can help taxpayers address potential concerns before they trigger federal scrutiny—though taxpayers must be careful not to focus on these priorities exclusively.

While the IRS prioritizes certain areas of enforcement at different points in time, its ultimate priority is reducing the tax gap through taxpayer compliance—and, while the IRS conducts targeted audits and investigations, it conducts random audits as well. As a result, all taxpayers are at risk of facing scrutiny, and all allegations of taxpayer noncompliance can lead to liability for back taxes, interest and penalties.

The IRS’ Enforcement Priorities for 2025 (and Beyond)

With that said, the IRS’ enforcement priorities are relevant to taxpayers, as noncompliance in these areas can increase taxpayers’ risk of facing both scrutiny and liability. As identified in the 2024 Financial Report, some of the IRS’ ongoing enforcement priorities include:

• Enforcement for large corporations and partnerships
• Enforcement for high-income and high-wealth individuals
• Enforcement in areas where audit coverage has declined (including pass-through entity income tax compliance)
• Enforcement in complex, high-risk and emerging areas (including cryptocurrency, offshore bank accounts and online gambling tax compliance)

By focusing its enforcement efforts in these areas, the IRS collected “more than $98 billion in enforcement revenue” during its 2024 fiscal year. In doing so, it relied heavily on its increased funding under the Inflation Reduction Act—which funding will remain available to the agency in 2025.

Are You (or Your Business) Prepared to Withstand IRS Scrutiny in 2025?

With all of this in mind, are you (or your business) prepared to withstand IRS scrutiny in 2025? The IRS is ramping up its auditing efforts, establishing both new enforcement units and new enforcement positions that will be tasked specifically with enforcing taxpayer compliance going forward. The IRS is investing heavily in technology as well.

By relying on artificial intelligence (AI) and other technological tools to identify potential red flags in taxpayers’ filings, the IRS is able to more efficiently deploy its human resources when necessary. This includes not only conducting federal tax audits, but also conducting criminal tax fraud and evasion investigations. For non-compliant taxpayers, both types of inquiries can present substantial risks, and this makes it critical to proactively address any compliance concerns as soon as possible.

Schedule an Appointment with Boston Tax Lawyer Kevin E. Thorn

If you have concerns about your (or your business’) federal tax compliance record or if you have been contacted by an agent at the IRS, we encourage you to contact us promptly for more information. To schedule an appointment with Boston tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, please call 617-692-2989 or contact us confidentially online today.