IRS Launches Initiative to Target High-Income Non-Filers - Introduction
In a significant move to clamp down on tax evasion, the
Internal Revenue Service (IRS) unveiled a new initiative on February 29, aimed at individuals who have neglected to file their income tax returns for 2017 and subsequent years.
What's it all about?
This program, powered by the financial backing of the Inflation Reduction Act, represents a continuation of the IRS's intensified efforts to scrutinize the tax compliance of large corporations, partnerships, and high-net-worth individuals, a strategy highlighted in a GT Alert from September 2023.
This initiative also aligns with the IRS's ongoing operations to recover taxes from millionaires who owe substantial amounts in back taxes.
Thanks to these concerted efforts, the agency has successfully recuperated nearly $500 million to date.
Who is it targeting and how?
The current non-filer campaign specifically targets taxpayers who earned between $400,000 and $1 million from 2017 to 2021.
The IRS plans to dispatch over 100,000 compliance letters to this demographic, sending out between 20,000 and 40,000 letters (CP-59) each week.
Additionally, for those with incomes exceeding $1 million, over 25,000 individuals will receive compliance notifications.
The IRS identifies potential non-filers in these income brackets using third-party data, including information from W-2s and 1099 forms, among other sources.
IRS warning
The IRS has issued a stern warning to these high earners, urging them to promptly rectify their filing status to avoid further notices, escalating penalties, and the possibility of criminal prosecution.
Taxpayers who disregard the initial compliance letters will face additional notifications and could be subjected to audit and collection enforcement measures.
In extreme cases, the IRS has the authority to prepare a Substitute for Return (SFR) for non-filers, using only reported income information.
This action could lead to a higher tax liability for the taxpayer, as it doesn't account for any deductions or exemptions they may be entitled to.
Such individuals might then find themselves compelled to either settle the increased tax debt or challenge the IRS's assessments in court.
IRS Launches New Initiative to Target High-Income Non-Filer - Conclusion
The message from the IRS is clear: with enhanced resources and a firm commitment, the agency is actively pursuing high-income individuals who have failed to file their tax returns.
This initiative underscores the importance of staying compliant with tax filing obligations and consulting a trusted tax professional if you've missed filing returns for 2017 or later years.
Final thoughts
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