2023 IRS Audits

[Mallory H]

Is anyone seeing an uptick in IRS audits for the 2023 plan year?

[Paul I]

It is fairly common to see an uptick in IRS audits after the start of the third year before the current year.  In §6501. Limitations on assessment and collection, the IRS generally cannot assess taxes for closed years (more than three years ago). There are exceptions, so do not assume three years is any kind of safe harbor.

Consider that in the latter part of the current calendar year, the plan files a 5500 for the prior year.  The IRS then uses the 5500 information as part of its process to select plans to audit. In the following year (and based on availability of resources and focused on any strategic initiatives), the IRS begins sending notices to plans of their selection for an audit.