IRS Audit Changes & Data Risks: What Businesses Must Know

Big Changes Are Coming From the IRS — Here’s What You Need to Know

The IRS (Internal Revenue Service) is getting ready for some big changes. These updates could affect how taxes are done for large businesses and how safe your personal data is. If you're a business owner or a tax professional, it's important to stay ahead.

Let’s break it down in a simple way so you know what’s going on and how it could impact you — especially for the 2026 tax season.

What’s New? A Law Called OBBBA

A new law called the OBBBA was passed to help improve the tax system. This law is meant to make audits for large businesses faster and smoother. That sounds like a good thing, right?

Well, yes and no.

The IRS is now giving new rules to help make this law work. One part of this is interim guidance, which means early instructions the IRS is using before it rolls out permanent rules.

These changes mostly affect big companies. But don’t tune out yet — even small businesses and regular taxpayers could feel the ripple effects.

The IRS Is Streamlining Big Business Audits

Audits are when the IRS double-checks a company’s taxes to make sure everything was filed correctly. With this new guidance, the IRS wants to make that process quicker and less confusing.

Here’s what that could mean:

Large companies may get more organized audits.
The IRS might use new tools or systems to look at records faster.
Mistakes could be caught earlier, or missed completely if staff is limited.

While this helps big businesses, it could also shift IRS focus toward smaller firms or individuals — especially as they try to balance their workload with fewer people and less money.

IRS Staffing and Budget Are Down — That’s a Problem

Here’s where things get tricky.

The IRS is facing a 37% drop in funding and major staff shortages. In fact, many experts are warning that this could make things really hard during the 2026 tax filing season.

Why does that matter?

Fewer staff means:

Longer wait times for help.
Slower response to questions or letters.
Delays in processing refunds.
More mistakes or overlooked details during audits.

It’s like trying to run a big store with half the workers. The job can still get done, but it’s going to take longer and probably feel a lot more stressful — for everyone.

Rising Risk of Data Breaches

While all this is happening, another big worry is data security.

When you file your taxes, you share a lot of personal and financial information. That data has to be protected. But with budget cuts, the IRS may struggle to keep systems up to date — making it easier for hackers to get in.

That’s why the IRS is telling tax professionals to create and update something called a Written Information Security Plan (WISP).

Think of a WISP like a safety plan. It lists how your data is protected, who has access, and what to do if something goes wrong. Every tax pro should have one. If you’re a business owner and work with a CPA or accountant, ask them if they have a WISP in place.

What Can You Do Right Now?

Whether you run a business or just want to make sure your taxes go smoothly, here are a few smart steps to take:

Talk to Your Tax Preparer Early
Don’t wait until 2026. Ask your accountant now how they’re preparing for IRS changes.
Protect Your Data
Use secure passwords, don’t share tax info through email, and make sure your files are encrypted.
Ask About Their WISP
If your tax advisor doesn’t have a WISP, that’s a red flag. It means your info could be at risk.
Stay Updated on Tax Rules
Laws are changing fast. Follow IRS updates or sign up for newsletters from trusted tax professionals.
Keep Your Records Organized
The better your records are, the easier tax time will be — especially if audits become more common.

Why This Matters to You

You may be wondering, “Why should I care? I’m not a Fortune 500 company.”

Here’s the thing: When big systems change, they affect everyone down the line. If the IRS is overworked and underfunded, you might:

Wait longer for your refund.
Have your tax return flagged by mistake.
Face new requirements for filing or security.

Plus, your accountant or bookkeeper will be juggling more — which means it's important for you to stay proactive and protect your own data.

One Last Thing: Don’t Wait Until It’s Too Late

The 2026 tax season may seem far away, but the smart move is to start preparing now.

The IRS is dealing with less money, fewer staff, and bigger jobs. That means tax professionals and business owners need to step up and stay informed.

If you’re not sure where to start, you don’t have to do it alone.

Tax rules and systems are always changing. But this latest update from the IRS — with audit changes, funding cuts, and rising data risks — could be a sign of more shifts ahead.

Stay ready. Stay protected. And stay connected to people who know how to navigate the changes.