Key Takeaways from the “Breaking Down Tax Controversy: Key Issues in 2025” Webcast

On February 12, 2025, tax professionals Alan Goldenberg and W. Curtis Elliott participated in The Knowledge Group’s webcast called Breaking Down Tax Controversy: Key Issues in 2025, where they shared insights on IRS enforcement and compliance developments. Below are some key takeaways:

IRS Focus on High-Income Taxpayers
& Large Partnerships

The IRS is intensifying audits of high-income individuals and large partnerships, with a key focus on enforcement. Through the Global High Wealth (GWH) program, the agency targets high-income non-filers and filers, already recovering over $1.1 billion. Meanwhile, audits of large partnerships now emphasize basis calculations, loss limitations, and R&D credits, with artificial intelligence (AI) playing a crucial role in identifying high-risk cases.

Common IRS Audit Triggers

Several common IRS audit triggers have emerged, including unreported income from investments, cryptocurrency, and offshore accounts. Business expenses—such as corporate aircraft, tax shelters, and personal expenses improperly claimed as deductions—are also under scrutiny. Additionally, the IRS is closely monitoring foreign financial accounts with missing disclosures, including FBARs and Forms 5471 and 3520. Employee Retention Credit (ERC) claims have drawn heightened attention as well, with $6.97 billion flagged for review.

Monetized Installment Sales

In addition, the IRS has intensified its crackdown on monetized installment sales, which it has labeled as potentially abusive. As a result, new reporting rules will now require taxpayers to disclose these transactions, leading to increased oversight and enforcement.

New IRS Voluntary Disclosure Requirements

Recent changes to IRS voluntary disclosure requirements are also noteworthy. Taxpayers must now admit willful non-compliance before applying and amended tax returns must be prepared prior to submitting a voluntary disclosure request. These changes add to the compliance burdens and raise legal risks, making it crucial to seek professional advice.

Best Practices to Avoid IRS Issues

To reduce the risk of IRS issues, taxpayers should take proactive steps to ensure compliance and minimize exposure. Key best practices include:

• Maintaining clear communication with the IRS to prevent misunderstandings.
• Protecting privileged information and considering voluntary disclosure if criminal liability is a concern.
• Utilizing Kovel arrangements to safeguard tax return preparation.
• Exploring penalty abatement options, such as First Time Abatement, if reasonable cause exists.
• Addressing past-due liabilities promptly through immediate payment or an installment plan to mitigate further risk.

Conclusion

The IRS is ramping up audits and enforcement, leveraging AI and data analytics to detect non-compliance. High-income earners, large partnerships, and businesses should be prepared for increased scrutiny. To stay compliant and minimize risk, proactive tax planning and expert guidance are essential.

To learn more about how to protect your business, contact Alan Goldenberg, Principal and Leader of the State and Local Taxation and Tax Controversy groups, or your Anchin Relationship Partner.