IRS Launches Tax Compliance Effort Aimed at High-Income Non-Filers

In late February, the Internal Revenue Service announced a new effort aimed at high-income non-filers to improve tax compliance. More than 125,000 instances since 2017 have been identified for the federal agency to pursue, beginning with IRS compliance letters.

Tax Compliance Efforts to Reach Those with More Than $1 Million in Income

With the help of Inflation Reduction Act funding, tax compliance letters from the IRS started going out in late February for more than 125,000 instances where tax returns haven’t been filed since 2017.

“The mailings include more than 25,000 to those with more than $1 million in income, and over 100,000 to people with incomes between $400,000 and $1 million between tax years 2017 and 2021,” an IRS news release noted.

In these cases, the federal agency received third-party information including Forms W-2 and 1099s that suggested these individuals received income in those aforementioned ranges but didn’t ultimately file a tax return.

“At this time of year when millions of hard-working people are doing the right thing paying their taxes, we cannot tolerate those with higher incomes failing to do a basic civic duty of filing a tax return,” said IRS Commissioner Danny Werfel.

“The IRS is taking this step to address this most basic form of non-compliance, which includes many who are engaged in tax evasion. This is one of the clearest examples of the need to have a properly funded IRS.”

Effort Meant to ‘Ensure Fairness’

“With the Inflation Reduction Act resources, the agency finally has the funding to identify non-filers, ensure they meet this core civic responsibility, and ultimately help ensure fairness for everyone who plays by the rules,” Commissioner Werfel added.

In the coming weeks, around 20,000 to 40,000 compliance alert letters will go out each week. Filers in the highest-income categories should be the first to receive this correspondence.

“If someone hasn’t filed a tax return for previous years, this is the time to review their situation and make it right,” Werfel said. “For those who owe, the risk will just grow over time as will the potential for penalties and interest.”

“These non-filers should review information on IRS.gov that can help and consider talking to a trusted tax professional as soon as possible” he noted.

Indeed, according to the IRS, the failure-to-file penalty amounts to 5 percent of the amount owed every month up to 25% of the tax bill. It is extremely important that people who receive these letters try to remedy the situation as soon as possible.

People who ignore these letters may receive further notices and face other enforcement actions, including IRS compliance activity such as collection and audit action or potential criminal prosecution.

Contact Dayes Law Firm for Assistance

The team at Dayes Law Firm can help deliver relief from and resolve outstanding tax compliance issues, including assisting high-income non-filers. It is highly recommended that non-filers consult with a qualified tax professional as soon as possible to resolve these delayed tax return issues and pay outstanding tax liabilities.

Fixing these previous non-filing errors and ensuring compliance with the IRS moving forward are achievable goals that the tax attorney team at Dayes Law Firm can assist with. Please don’t hesitate to contact us today to see how we can help you if you’ve received a compliance alert letter from the IRS.

Our seasoned tax resolution and compliance attorneys have the experience and knowledge needed to help you resolve compliance concerns. Contact our firm at (800) 803-2000 for a free, no-obligation consultation today.