If you are a business owner or work in corporate finance, there are big changes coming your way. The IRS has just rolled out some important updates that will affect how certain businesses go through audits in 2025 and 2026—especially those involved in the Acknowledgement of Facts (AOF) process.
These changes are designed to make IRS examinations more efficient and less drawn-out, but you need to know what is coming so you can plan ahead. Whether you have dealt with IRS audits before or this will be your first time, here is what you need to be aware of.
What is the IRS AOF process, and why is it changing?
The AOF process—short for Acknowledgement of Facts—was a formal part of the IRS audit procedure for businesses. It required companies to agree (or disagree) with specific facts presented by the IRS before finalizing an audit.
But here is the deal:
- The IRS says the AOF process often caused delays and did not add much value.
- So now, they are phasing it out entirely by the end of 2025.
- Between now and December 31, 2025, you can still choose to participate in the AOF process, but you do not have to.
If you are someone who will be audited in the next couple of years, this change could mean less paperwork and faster audit completion. That is good news—if you know how to adjust to the new process.
Who needs to pay attention to this IRS change?
If you are part of a large business or corporate taxpayer group, this update affects you the most. These new procedures apply especially to those involved in Large Business & International (LB&I) audits.
Here is who needs to stay alert:
- Large corporations that file complex returns
- Businesses currently or soon to be under IRS examination
- Tax professionals who help companies respond to audits
- Financial officers who deal with IRS compliance
This is not about regular W-2 income or individual tax filings. It is mainly for businesses and corporate groups that deal with in-depth IRS audits.
What new audit tools is the IRS offering?
The IRS is not just removing the AOF process. They are also adding a few better tools to make tax disputes easier to resolve. These are the two other big changes:
Expanded Accelerated Issue Resolution (AIR)
- AIR lets you resolve multiple tax years at once by agreeing on issues early
- It now covers Large Corporate Cases, not just smaller exams
- This change means less back-and-forth and fewer drawn-out battles
So, if your company is under audit and has the same issue across several years, you can now settle it faster.
Stronger Fast Track Settlement reviews
- The IRS is tightening its review process before they deny a Fast Track Settlement (FTS)
- You are now more likely to get a fair chance at a quick settlement
- FTS lets you avoid long appeals and resolve the issue directly with a mediator
This could make audits feel more like a conversation and less like a courtroom fight.
What is the goal of these new IRS procedures?
The IRS says they want to speed up the audit process and encourage more collaboration between taxpayers and agents.
According to the new memo, titled “Reinforcing the Customer Focused, High Efficiency Large Business & International Examination Process,” the goal is simple:
- Fewer delays
- More transparency
- Faster results
For years, audits could drag on for months—or even years. That is expensive, frustrating, and stressful. These changes are the IRS’s way of admitting the system needed improvement.
What should you do now?
If you or your company is likely to be audited between now and 2026, here are a few steps to take:
- Talk with your tax professional about whether to opt in or out of the AOF process for 2025
- If you are involved in a corporate audit, ask about using AIR or Fast Track Settlement
- Keep an eye on more IRS updates—this is just the beginning of several changes for business taxpayers
By staying informed now, you will avoid stress and confusion later. The audit process is changing, and being prepared will put you ahead of the game.
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