After Collecting $98.7 Billion in Enforcement Revenue in FY 2024, the IRS Eyes More in 2025

According to the Internal Revenue Service’s (IRS) 2024 Financial Report, the agency collected $98.7 billion in enforcement revenue over the past year. While this is a substantial sum, it represents just a fraction of the federal tax gap—the difference between what U.S. taxpayers pay and what they actually owe. As a result, the IRS is looking to collect even more in 2025, and with additional funding under the Inflation Reduction Act, it has several plans for doing so. Learn more from Virginia tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group.

IRS to Target Several Enforcement Priorities in 2025

While the IRS enforces taxpayers’ obligations across the board, it has identified several priority enforcement areas in recent years. These priorities generally fall into one of two categories: (i) targeting taxpayers with substantial liability; or, (ii) targeting common and emerging issues that involve a substantial number of returns.

In its 2024 Financial Report, the IRS attributes a substantial portion of its enforcement revenue over the past year to targeting taxpayers in the first category. This includes:

• High-Income Corporations and Partnerships – The IRS has recently devoted substantial resources to targeting high-income corporations and partnerships suspected of all forms of federal noncompliance. This includes not only income tax noncompliance but employment and payroll tax noncompliance as well.
• High-Income Individual Taxpayers – The IRS launched two separate initiatives targeting high-income individual taxpayers in 2024. The first targeted taxpayers with more than $250,000 in recognized tax liability, while the second targeted taxpayers with unreported annual income of $400,000 or more.

Heading into 2025, we anticipate that the IRS will not only continue to target high-income taxpayers but also continue to target a number of the issues that had high rates of noncompliance in 2024. Some examples of these issues include:

• Pass-Through Entities – The IRS recently launched a new pass-through field operations unit that will be targeting partnerships, S-corporations, limited liability companies (LLCs), trusts and their owners in 2025.
• Cryptocurrency – Cryptocurrency income tax compliance has been a priority for the IRS for the past several years, and, with values increasing after the presidential election, this will almost certainly be a significant area of focus for the IRS in the inauguration year.  
• Online Gambling and Gaming – As more states continue the push to legalize sports betting and other forms of online gambling and gaming, the IRS is continuing its push to prioritize income tax compliance in this area as well.
• Offshore Bank Accounts – Offshore bank account disclosure compliance is a perennial enforcement priority for the IRS.
• PPP and ERC Fraud – Paycheck Protection Program (PPP) and Employee Retention Credit (ERC) fraud will continue to be enforcement priorities for the IRS in 2025 as well.

Schedule a Call with Virginia Tax Lawyer Kevin E. Thorn

If you have concerns about the possibility of facing IRS scrutiny in 2025, we encourage you to contact us to learn how we can help. To schedule a call with Virginia tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, please call 703-752-3752 or tell us how we can help online today.