In 2025, the Internal Revenue Service is undergoing its most aggressive enforcement push in over a decade. With new funding from the Inflation Reduction Act, enhanced data analytics, and a renewed mission to close the tax gap, the IRS is auditing more individuals and small businesses than at any time in recent memory.
But here’s the truth:
An audit doesn’t have to mean panic.
With the right documentation, representation, and mindset, it’s possible to resolve audits quickly — and even come out ahead.
At Riley & Company CPA, we’ve helped dozens of clients successfully navigate IRS audits, CP2000 notices, and underreporting challenges. In this guide, we’ll show you what triggers audits in 2025, how to prepare in advance, what to do (and not do) if you’re selected, and how we defend your interests every step of the way.
Let’s start with why the audit climate is different this year:
1. Increased IRS Funding = More Enforcement
The Inflation Reduction Act earmarked $80 billion for IRS improvements over 10 years. While some of that funding has been adjusted, it has already enabled:
Translation: The audit net is wider, and it’s casting faster.
2. Better Data Matching and Automation
The IRS now automatically matches:
This data matching leads to CP2000 notices — automated “soft audits” requesting clarification or correction.
3. Focus Areas for 2025
IRS audits this year are focusing on:
Whether you’re a consultant, shop owner, or side hustler, you are on the radar.
Understanding common red flags can help you stay out of the crosshairs. Here are the top triggers:
1. Income Mismatch
Failing to report income that’s been reported to the IRS via:
The IRS’s systems automatically issue CP2000 notices when these don’t line up. Even small mismatches can trigger letters.
2. High or Unusual Deductions
While deductions are legal and encouraged, excessive or poorly documented deductions may raise red flags:
We help clients document deductions in ways that withstand IRS scrutiny.
3. Repeated Business Losses
If your Schedule C shows losses for 3 consecutive years, the IRS may reclassify your activity as a hobby — disallowing deductions entirely.
4. Excessive Credits or Refund Claims
Claiming:
…without substantiation may trigger review — especially in 2025, as these are under heightened audit.
The best audit defense begins before the IRS ever contacts you.
1. Keep Thorough Documentation
You must keep records for at least 3 years, and in some cases up to 7 years.
Recommended records include:
Tip: Use digital apps like Dext, Expensify, or QuickBooks to maintain audit-ready files.
2. Conduct an Annual “Pre-Audit” Review
We offer mid-year and year-end reviews to:
Our goal is to eliminate surprises before the IRS notices anything.
3. Understand Your Return — Even if You Use a Preparer
Many taxpayers blindly sign returns without reviewing them. That’s risky. If audited, you are responsible, not just your preparer.
We ensure every client understands their:
Not all IRS letters are audits. But all of them must be taken seriously.
Step 1: Don’t Panic — But Don’t Ignore It
Most IRS letters are time-sensitive, giving you 30 to 90 days to respond.
Step 2: Verify It’s Real
IRS scams are rampant. Look for:
Still unsure? Call us. We verify notices at no cost.
Step 3: Gather Documentation and Respond Promptly
If the notice involves:
We help draft and submit professional responses, minimizing back-and-forth and avoiding costly errors.
Step 4: Hire Representation
Whether it’s a CP2000 or a full-blown audit, you don’t have to go it alone.
As your CPA, we can:
This takes the stress, confusion, and emotion off your plate.
We don’t just prepare returns — we stand behind them.
Here’s how we support clients facing IRS scrutiny:
🔹 Audit response preparation — with customized cover letters, forms, and backup
🔹 IRS representation and Power of Attorney filing
🔹 Penalty abatement requests (for first-time or reasonable cause cases)
🔹 Installment agreement or Offer in Compromise (OIC) support
🔹 Ongoing audit-prevention reviews for high-risk filers
🔹 Mid-year tax strategy to proactively avoid triggers
Whether you’re self-employed, own a small business, or are simply worried about audit risk, we ensure you’re ready to face the IRS — with confidence.
IRS audits are increasing in 2025. But you have the power to protect yourself by:
✅ Filing clean, accurate returns
✅ Documenting deductions thoroughly
✅ Responding quickly and professionally
✅ Partnering with a CPA who knows how to fight — and win
Don’t go it alone. And don’t wait until the IRS sends a letter.
📞 Concerned about audit risk or received a notice already?
We’re here to help — with years of experience, insider insights, and a commitment to your peace of mind.
🗓️ Schedule a confidential audit consultation today
👉 Visit: https://www.rileycpa.com
📍 Serving clients in Scranton, Wilkes-Barre, and across Pennsylvania
You don’t need to predict the future. You just need to prepare for it.
With smart cash management, thoughtful tax strategy, and the right advisory partner, you can turn uncertainty into opportunity.
