IRS Audit Triggers for Small Businesses in 2026: What’s on Their Radar Right Now
Small business owners in 2025 face a more active IRS than in recent years, thanks to upgraded data matching tools and increased enforcement funding. This post breaks down the specific audit triggers that are drawing the most IRS attention right now, including income mismatches with third-party 1099s, disproportionate deductions, cash-based business reporting gaps, and consecutive years of reported losses. It explains how the IRS’s automated Discriminant Income Function scoring system works and what pushes a return into review territory. A clear comparison of DIY filing versus working with a CPA shows why professional review offers meaningful protection for businesses with multiple deductions or employees. A practical five-step action plan and pre-filing checklist give business owners concrete steps to take before submitting their returns. Indiana-specific risks are addressed, including the likelihood of parallel state review when the IRS flags a return. The post closes with a direct call to action for Indianapolis-area business owners to connect with On-Target CPA for a proactive return review before any problems arise.
