The IRS Wants to Speed Up Audits — Here’s What’s Changing
A memo dated July 23, 2025, quietly landed in inboxes inside the IRS’s Large Business and International (LB&I) Division.
We haven't heard much about it, but in practice, it could reshape the way some of the most complex IRS audits get resolved—and that's the kind of stuff that can directly affect your clients, their bottom line, and their peace of mind.
Why This Matters
LB&I handles the IRS’s biggest and messiest audits, including large corporations, multi-year issues, and high-stakes disputes.
These aren’t the kinds of cases that quietly disappear.
Historically, they’ve dragged on for years, draining resources and putting clients (and their advisors) in a holding pattern.
However, the new LB&I memo signals that the IRS wants to close cases faster, remove bottlenecks, and encourage earlier resolutions.
They’re actually making three concrete policy changes that will roll out in 2025 and 2026.
1. Goodbye to the Acknowledgment of Facts Process
Starting in 2026, LB&I will eliminate the Acknowledgment of Facts (AOF) process.
If you’ve never been through it, here’s the quick version: Near the end of an audit, the IRS issues an AOF Information Document Request summarizing its version of the “facts.” The taxpayer is asked to agree or disagree.
The problem? By that point, those “facts” are already written in a way that favors the IRS’s position. And if you disagree later in Appeals, the case might get sent back to Exam for more fact-finding — a huge delay. Since many taxpayers decline to respond at all (Exam can’t force them), the AOF process often adds nothing but time and frustration.
Cutting it out means one less procedural speed bump — and potentially a quicker path to resolution.
2. More Use of Accelerated Issue Resolution (AIR)
AIR is one of those tools most people outside IRS controversy circles have never heard of, but it can be a big deal for recurring issues.
It allows taxpayers and the IRS to reach an agreement on certain issues and apply that agreement across multiple tax years — locking in certainty instead of fighting the same battle year after year.
Here’s why this matters for your clients:
Without AIR, every audit year is its own fight.
With AIR, you can potentially close the door on repetitive disputes.
The catch? AIR agreements require detailed submissions and review by the IRS Chief Counsel, and they only happen if the IRS believes it’s a fair and final resolution. The memo makes it clear: LB&I wants to see more of these agreements in play. For the right client, that’s a strategic advantage worth exploring.
3. Higher Bar for Denying Fast Track Settlement (FTS)
FTS is the IRS’s version of bringing in a mediator so things don't go south. It pulls in Appeals to help both sides reach a resolution — often in about 60 days.
Historically, exam teams could deny an FTS request without much oversight. Now, every proposed denial must be reviewed at a higher level and reported to the LB&I deputy commissioner.
Translation: fewer arbitrary denials and more opportunities to settle before the audit drags on for another year (or three). FTS isn’t a fit for every case, but for disputes where the issues are clearly defined and the parties are willing to talk, it’s a powerful way to shorten the fight.
TL;DR
The LB&I memo introduces three shifts that could directly impact clients:
⏩ Acknowledgment of Facts Process eliminated in 2026 — one less procedural delay in audits.
⏩ Accelerated Issue Resolution agreements are encouraged — more chances to settle recurring issues across years.
⏩ Fast Track Settlement denials face higher scrutiny — more cases could get resolved early.
These changes may not affect every taxpayer, but for clients facing (or fearing) large IRS audits, they represent a push toward speed, certainty, and earlier closure.
➥ Contact Attorney Stephen A. Weisberg for a free Tax Debt Analysis.
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