On May 2nd the IRS released their new strategic operating plan that, among other things, announces their enforcement priorities for the upcoming year. Based on this IRS guidance, it's fair to say that if you are in Accounts Payable or Tax at a medium-large sized institution then you will want to be extra careful in 2024.

That's because the IRS plans to triple the audit rates on large corporations with assets of more than $250 million. Audit rates for these companies will rise to 22.6% in tax year 2026 from 8.8% in 2019. In addition, large partnerships with assets of more than $10 million will see their audit rates increase 10-fold, rising to 1% in tax year 2026 from 0.1% in 2019.

Making these aggressive audit rates possible has been the ramp up in hiring. By 2019 the IRS had been reduced to only 73,000 employees (down from over 100,000 in their prime during the 1980s and 1990s). Today the IRS is back up to 90,000 plus employees and climbing - with a target of over 102,500 full-time equivalent employees to be reached in the next few years.

In this kind of aggressive audit environment now is not the time to be lax in your 1099 compliance efforts. Stay up-to-date on changes in the law, your training, and 1099 filing policies and procedures. Or don't, and face the increasing likelihood of a very negative interaction with the IRS.