IRS audits are changing in 2026. New reporting rules, expanded enforcement funding, and AI-driven audit selection are reshaping how taxpayers are identified, contacted, and reviewed. If you are a business owner or financial professional, staying ahead of these shifts can help you avoid penalties, prepare documentation that aligns with IRS expectations, and respond quickly if your return is flagged.
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California Sales Tax vs California Use Tax – A Business Owner’s Guide to CDTFA Audits
California’s tax system can be confusing, especially for business owners navigating sales tax, use tax, and excise tax obligations. The California Department of Tax and Fee Administration (CDTFA) enforces these rules, and when discrepancies arise, they audit.
For many businesses, a CDTFA audit starts with something as simple as an exemption error, a missing resale certificate, or a purchase from…
Restaurants: The Top Three Triggers of Sales Tax Audits
California restaurants operate under some of the most complex tax and reporting rules in the country. Between sales tax, use tax, cash handling, tip reporting, and new gratuity regulations on the horizon, even well-run businesses can find themselves facing a CDTFA sales tax audit.
In this video, John highlights three of the most common triggers of a California sales tax…
EDD Audits Are Expanding. Here’s What California Businesses Need to Know
California businesses are seeing a sharp rise in Employment Development Department (EDD) audits, and one of the most significant changes is the expansion of audit lookback periods. While a standard audit typically covers three years, EDD now has the authority to reach back eight years when independent contractor issues are involved. For companies that work with 1099 workers, this shift…
Why Your Business Might Be Targeted for a Sales Tax Audit
Most business owners are caught off guard when they receive a letter from the California Department of Tax and Fee Administration (CDTFA) notifying them of a sales tax audit. The first question is always the same: Why me?
The reality is that there are clear patterns in how businesses are selected for review.
Reason #1: Reported Revenue Looks Inconsistent
One…
How to Respond to IRS Letter 6323 | Tax Audit Notice Explained
If you’ve received IRS Letter 6323, you’re officially the subject of an IRS tax audit. This notice is not a scam, not a phone call, and not an email, it comes only through certified mail.
For business owners and individuals in San Diego, Southern California, and across California, this letter can feel intimidating. But understanding what Letter 6323 means,…
When the IRS Goes Back 20 Years: Why Business Owners Need an Experienced IRS Audit Attorney
The Reality of Extended IRS Audits
Many business owners believe the IRS can only look back three years. Some prepare more carefully and keep records for seven years. Both assumptions can leave you exposed. When tax attributes like net operating losses (NOLs) are involved, the IRS has authority to extend its review far beyond the typical three-year window.
John Milikowsky,…
Beware of the M&A Trigger for Sales Tax Audits
If you are selling your business in California and you have a sales tax account with the CDTFA, there’s a critical step you need to know about: requesting a tax clearance certificate.
While this step is often seen as routine in a mergers and acquisitions (M&A) process, it carries a hidden risk. Requesting a clearance can sometimes trigger an audit,…
California’s $8.55 Million Boost to Local Wage-and-Hour Enforcement
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California’s $8.55 Million Boost to Local Wage-and-Hour Enforcement
California has injected $8.55 million into 16 local prosecutor offices through its Labor Code Enforcement Grant Program, marking a significant escalation in the state’s efforts to hold employers accountable for wage-and-hour violations.
This funding shifts enforcement power from
This funding shifts enforcement power from
…
Could Tax Evasion Be Prosecuted as Money Laundering?
The Emerging Legal Threat
Most business owners understand that tax evasion is illegal. But few realize that it could soon carry even steeper consequences, including charges for money laundering.
This isn’t speculation. A growing number of international frameworks and academic studies, including guidance from the Financial Action Task Force (FATF), are pointing to a future where tax evasion could be…