The Inflation Reduction Act of 2022 appropriated $79.4 billion in supplemental IRS funding through fiscal year 2031. Through three separate rescissions, Congress has now clawed back roughly $42 billion of that money. ¹ The IRS that taxpayers will face in fiscal year 2026 is materially smaller, less aggressive, and visibly under-resourced compared to the 2023–2024 IRS that audited large partnerships and high-income individuals at increasing rates. Our practice has rebuilt its expectations around three premises: notice volume will keep rising, partnership audits will continue but at a slower pace, and ERC second-look exposure will remain front-and-center for at least 18 more months.
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