“The short-term milestones will look much different than in the service area,” Nikole Flax, an IRS official leading efforts on Inflation Reduction Act implementation, said at a March conference hosted by the Federal Bar Association, before the release of the budget document. She said it will take a significant hiring effort just to prevent the agency’s workforce from shrinking.
On large corporations with assets of at least $250 million, the IRS had 1,365 examination starts in fiscal 2022, and its targets are 1,121 in fiscal 2023 and 947 in fiscal 2024. On partnerships, the IRS had 3,155 examination starts in fiscal 2022 and is targeting 8,852 in fiscal 2023 and 5,253 in fiscal 2024. These targets reflect both Inflation Reduction Act funds and discretionary funds, according to the budget document.
The IRS said that it has been able to hire and train new employees to audit partnerships, but the timing of the hiring and start date for training means that the impact of Inflation Reduction Act funding won’t been seen until at least fiscal 2025. The agency also said the target for large corporations is lower for next year than it is for this year because of the need to train new employees, the lengthy amount of time it takes to audit large corporate returns, and a focus of resources on high-income individuals—where the fiscal 2024 target is higher than fiscal 2023—and partnerships.
Abbey Garber, a partner at Holland & Knight, said the IRS has already been ramping up partnership audits, and it makes sense for the agency to focus on that area.
“The world has gone from corporations to partnerships over the last few decades,” he said.
