IRS Targets Wealthy Households And Corporations In Tax Compliance Blitz

The Internal Revenue Service (IRS) has set its sights on increasing audits for rich taxpayers and businesses as it absorbs billions of dollars in funding aimed at strengthening tax compliance at the top.

According to an IRS report released Thursday, the agency wants to achieve a 50% increase in the audit rate for households with incomes of $10 million and above by the time people file their 2026 taxes, while also aiming to nearly triple the rate of corporate audits.

IRS Commissioner Danny Werfel assured reporters that there are no plans to increase audits on households making less than $400,000, stating that audit rates for this group “remain at historically low levels.” Instead, the focus is on the top of the income distribution, with the goal of bringing “coverage rates” back to levels seen more than a decade ago before underfunding and waning staff counts.

The IRS’s plans are part of an ongoing effort to demonstrate how it intends to maximize the billions of dollars provided by the Inflation Reduction Act, passed in 2022 by a Democrat-controlled Congress. The agency is also highlighting its efforts as it makes the case for stable long-term funding levels, including through funding proposed in President Joe Biden’s 2025 budget.

Werfel emphasized that the IRS now has approximately 90,000 full-time employees, up from around 79,000 in fiscal year 2022, with an end goal of around 102,500 employees by the end of the decade, which he believes represents a “right-sized IRS.”