The IRS Wants to Fast Track Corporate Exams: But Will These 2025–2026 Changes Actually Work?

The IRS’s Large Business & International Division (LB&I) has announced sweeping changes aimed at speeding up large corporate examinations. On paper, it’s all about efficiency: less red tape, more collaboration, and faster certainty for taxpayers.

The big headlines:

• Elimination of the “Acknowledgement of Facts” (AOF) IDRs by 2026

• A tightened Fast Track Settlement (FTS) program, with even more executive oversight

• Formal clarification that Accelerated Issue Resolution (AIR) applies to Large Corporate Compliance (LCC) cases

Sounds great, right? Well… not so fast.

While these procedural tweaks make sense in theory, they’re being layered over a much deeper problem: years of resource reductions, poor staffing models, and a culture of shifting priorities that have dragged corporate exam timelines into the abyss.

1. The Acknowledgement of Facts (AOF) Process – A Convenient Scapegoat

When the AOF IDR was introduced, it was controversial from day one. The idea was noble: before a Notice of Proposed Adjustment (NOPA) goes out, both the IRS and the taxpayer confirm the facts—good and bad—so everyone’s working from the same page.

In reality? It was awkward, adversarial, and most taxpayers simply opted out.

But here’s the uncomfortable truth: AOF wasn’t the cause of long cycle times.

Cycle time—the IRS’s measure of the time between a tax return being filed and an exam being fully closed (including appeals)—ballooned because of one thing: a massive reduction in resources on these large corporate exams.

2. Why Cycle Times Really Exploded

Let’s break down what actually happened:

The LCC (Large Corporate Compliance) Initiative

In a push to be “data-driven,” LB&I introduced the LCC initiative. Sounds good, right?

Except:

• The data sourcing and selection models were deeply flawed.

• It appeared that data scientists dictated which exams were allowed to continue instead of senior leaders in the area, adding confusion instead of clarity.

• Senior exam managers noted that many obviously non-compliant taxpayers were never even selected.

The GS-14 Shift: Coaching Who, Exactly?

In the past, GS‑14 Revenue Agents served as Senior Team Coordinators, running large cases and pulling in the necessary specialist resources (most of which were local).

Then came hiring freezes. Specialists left. And someone decided GS‑14s should “coach and mentor” instead of coordinate.The problem? There was no one to coach. So LB&I pulled experienced agents off cases and reassigned them to “help train” others. The result: overworked agents, slower exams, and a serious drop in technical quality.

Bob coaches the new hire after receiving expensive coaching and mentoring training he didn't want or need

Complex Issues + No Technical Appeals Officers = Backlog

Complex corporate issues require experienced Appeals Officers. Unfortunately, that talent pool has also shrunk. The Appeals backlog grew so large that Appeals leadership tried to “fix” it with a new philosophy—Appeals Judicial Approach and Culture (AJAC)—which leaned heavily on the AOF concept.

The result? Frustration across the board. Revenue agents hated it. Appeals officers hated it.

And yes, cycle times got worse.

3. Fast Track Settlement – Will More Signatures Really Help?

The IRS is doubling down on oversight for FTS denials. Now, any denial of a taxpayer’s request for FTS has to be briefed all the way up to the LB&I Deputy Commissioner before being communicated.

This replaces an earlier policy that already required:

• DFO concurrence,

• Written explanations, and

• Notification to the FTS mailbox.

  
  

Here’s the problem: adding another layer of review will not make the process faster. It will just make “fast track” a little less fast.

As one current LB&I Executive put it: “We’re putting a new bandaid on the same gunshot wound.”

4. AIR: One Good Idea That Actually Helps

AIR (Accelerated Issue Resolution) is the one bright spot. It allows agreed-upon resolutions from one year to be applied to similar issues in other years.

For years, confusion over outdated terminology (“Coordinated Examination Program”) kept LCC teams from using it. This memo finally clarifies: AIR is absolutely available for LCC cases. That’s a win for efficiency.

Will These Changes Fix Anything?

These policy shifts do aim in the right direction. Removing unnecessary formalities like AOF, clarifying AIR, and emphasizing early resolution are good things.

But let’s be honest: the real problem isn’t process—it’s people. Without more experienced examiners, specialists, and Appeals Officers, no amount of policy tweaking will fix ballooning cycle times.

So while these changes might shave off a little time here and there, don’t expect miracles. Large corporate examinations will remain a long, resource-strained process until the IRS addresses its deeper staffing and structural issues.

Key Dates to Watch

• Through 2025: AOF optional

• 2026: AOF eliminated for good

  
  

Need guidance on navigating these changes—or avoiding an exam nightmare entirely? That’s where ExFed Tax comes in. With decades of experience running these exact kinds of cases from the inside, we know how to keep your exam on the Fast Track (even when the IRS doesn’t).

Contact us today