Following up on last year's record levels of enforcement collection the IRS is at it again. On January 5, 2021 the IRS announced (via IR-2021-03) that it had once again surpassed the $50 billion level in enforcement revenue collection. This time coming in at $51.1 billion in enforcement revenue collected during 2020.

This is important. If you are in Accounts Payable or Tax at an organization of any size then you must perform your due diligence this filing season. That's because the IRS is collecting a massive chunk of this revenue by focusing heavily on the 1099 reporting that is being done (or not done) by those organizations you work for (either as an employee or perhaps as a third party accounting/CPA firm).

Worse yet, the IRS also reported that the current FY 2020 staffing levels represent a 3.53% increase since the end of FY2019. This means, more auditors are now available to look into your organization's 1099 compliance and reporting than in year's past. And these auditors are becoming ever more adept at extracting large amounts of penalty revenue from organizations deemed to be under-reporters. To that end, the IRS has found that revenue officers within the Field Collection function have been collecting, on average, over $2.6 million each.

What this is telling us is that the cost of having an audit opened looking into your organization's payment and reporting processes has never been greater. It is also telling us that, in conjunction with rising penalty rates, the total penalties levied and collected are also on the upswing. Moreover, large businesses, those that file forms 1042/1042-S, and tax-exempt organizations continue to be the target of a number of IRS compliance initiatives.

The final takeaway here is that though it is true that as an individual your chances of being audited are certainly lower than in past years - the same does not hold true for the organizations you represent or where you work. The IRS enforcement efforts are much more ruthlessly being targeted at organizations of all sizes but with a special emphasis on medium and large-sized organizations like maybe the company, hospital, university, college, insurance company, or bank where you work.