IRS AI Audit Selection & New Reporting Requirements (1099-DA, FATCA)
Key Questions
How is the IRS using AI for audits in 2026?
The IRS is deploying 129 AI models to select returns for audit, increasing scrutiny on side income, foreign accounts, digital assets, and hobby losses. A former IRS agent video explains the selection process.
What new reporting requirements apply to digital assets?
A new 1099-DA form will report digital asset transactions, with CoinLedger and similar tools aiding tax-loss harvesting and compliance. This ties into broader FATCA and FBAR enforcement.
Who faces higher IRS audit rates?
Filers earning over $500,000 face roughly a 1-in-30 audit rate, compared to 1 in 1,000 for those under $200,000. Misclaiming items like the OBBBA senior deduction can also trigger reviews.
IRS deploying 129 AI models in 2026 for audit selection. New 1099-DA for digital assets, FATCA/FBAR traps, hobby loss rules, structuring red flags. Short video from former IRS agent explains how AI enters audit selection. This signals increased scrutiny for taxpayers with side income, foreign accounts, or digital assets. Ties to OBBBA $6k senior deduction as a potential red flag if misclaimed. A CoinLedger review highlights crypto tax loss harvesting and 1099-DA compliance.