If an IRS letter arrived tomorrow, could your team explain the difference between your marketplace sales, your bank deposits, and the revenue on your tax return? For an ecommerce owner, that question is more useful than trying to predict whether the IRS will select your business for an audit.
Our view at ECOM CPA is straightforward: build your tax plan around supportable positions and financial records you can explain. The latest enforcement statistics make that a timely conversation to have with your accountant.
What the numbers actually show
The Treasury Inspector General for Tax Administration, or TIGTA, published its compliance trends report on August 26, 2026. It covers fiscal year 2025, which ended September 30, 2025. These are historical operating results, not a forecast of 2026 audit activity.
The IRS reports approximately $5.3 trillion in gross tax collections for that year. The selected enforcement measures below cover payments attributed to compliance activity, comparing fiscal year 2024 with fiscal year 2025:
- Total enforcement revenue: $98.7 billion in FY 2024, $93.8 billion in FY 2025
- Examinations or audits: $10.0 billion in FY 2024, $6.5 billion in FY 2025
- Collection function: $82.1 billion in FY 2024, $81.8 billion in FY 2025
Total enforcement revenue fell about 5 percent. The 35 percent decline applies specifically to audit revenue. Collection revenue was nearly flat compared with 2024 and remained 17 percent above 2023, as shown in Figure 3 of the TIGTA report.
Partnership audit starts fell from 6,709 in 2023 to 1,589 in 2025, approximately 76 percent. Yet partnership audits closed were 3,111 and 3,141 in those years, according to Figure 11 of the same report. A decline in new cases does not describe every measure of audit activity.
Separately, the IRS Data Book reports 497,621 tax return audits closed in fiscal year 2025, with $26.8 billion in recommended additional tax. Recommended tax and money collected measure different things and should not be used interchangeably.
None of these figures establishes an audit probability for your ecommerce company. They also do not support treating an LLC or partnership as a safe place for an unsupported deduction.
Start with the gap between sales and deposits
An ecommerce business can have several valid numbers for the same month: customer payments, sales after refunds, marketplace payouts, and taxable profit. Your books need to explain how those numbers connect.
The IRS explains that Form 1099-K reports gross payment transactions before adjustments for items such as fees and refunds. The amount on that form is not automatically your taxable profit. It must be considered alongside your other records.
Consider a simplified example. Your store records $200,000 in customer sales, refunds $12,000, and pays $28,000 in marketplace and processing fees. Assume everything settles within the month, with no sales tax, reserves, or other adjustments. The bank receives $160,000.
Your books should show $188,000 in sales after refunds and $28,000 in fees. The $160,000 deposit is the cash result before inventory costs and other expenses. Recording only the deposit as revenue can leave both sales and expenses understated, even when the net effect on profit happens to be the same.
For each channel, maintain a reconciliation that connects transaction reports to settlement reports, the general ledger, and the bank. Then reconcile annual payment reporting forms to the appropriate tax return amounts, explaining differences rather than forcing them to match. Retain the reports used in that reconciliation.
Give every IRS notice an owner
An income mismatch can generate an IRS inquiry without a full audit. Through its Automated Underreporter Program, the IRS compares information reported by third parties with tax returns. It closed 987,460 such cases in fiscal year 2025, according to the IRS compliance statistics.
For an owner receiving a CP2000 notice on an individual return, the Taxpayer Advocate Service explains that the notice proposes changes based on a discrepancy. It is neither an audit nor a bill. Review the information, determine whether you agree, and respond as instructed by the stated deadline with supporting documents when needed.
Assign one person to receive tax correspondence, send it promptly to your CPA, and track the response through resolution. Include mail sent to a registered agent or an old business address. A notice sitting unopened while everyone assumes someone else is handling it is an avoidable operational failure.
Make your inventory and deductions explainable
The IRS recordkeeping guidance makes the obligation clear: you must be able to substantiate the income and deductions reported on your return. For a product business, that requires more than a bank statement showing that a supplier was paid.
Ask your accountant to walk through one product from purchase to sale. The supporting file should explain the quantity purchased, supplier cost, applicable freight and duties, inventory movements, and the amount recognized in cost of goods sold under your accounting method. Keep support for damaged goods, returns, and inventory adjustments.
Apply the same discipline to other deductions. Save invoices and the business purpose for expenses, separate owner purchases from business spending, and document the eligibility and calculation for any credit or material tax position. A number entered in accounting software should lead back to evidence.
Bring the tax plan into the monthly close
At your next accounting review, ask your CPA to open the latest reconciliations and identify unresolved differences. Agree on who will clear them and when. Review any outstanding notices, confirm that required filings and payments have been addressed, and document the assumptions behind major tax planning decisions.
That work also improves decisions about pricing, inventory purchases, and cash available for growth. When channel revenue and costs are reliable, the same records that support a tax return become more useful for running the business.
You should be able to pursue tax savings with a clear explanation of why you qualify and how the amount was calculated. Put that explanation in place while the records and decisions are still fresh.
ECOM CPA helps ecommerce brands connect monthly accounting with tax planning. If your marketplace settlements, inventory, and tax returns are difficult to reconcile, schedule a consultation to review your current setup and where it needs attention.
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