#IRS Cracking Down on Millionaires Who Haven’t Filed Taxes
As tax season approaches, the Internal Revenue Service (IRS) is ramping up efforts to ensure everyone is filing their income tax returns – especially millionaires who have been neglecting this responsibility.
##Unfiled Tax Returns Warning
With more than 125,000 notices being sent out to high-income households, the IRS is urging millionaires to get their financial affairs in order. It’s estimated that there could be “hundreds of millions” of dollars in unpaid taxes waiting to be collected.
##Targeting High-Income Households
Over 100,000 notices will be sent to households earning between $400,000 and $1 million, while another 25,000 will go to those with incomes of at least $1 million. These notices will address unfiled tax returns, some dating back to 2018.
##Crackdown on Non-Filers
IRS Commissioner, Danny Werfel, emphasized that the IRS has data on non-filers through third-party income reports. These reports show substantial income received by individuals who have failed to file tax returns, totaling over $100 billion in unreported financial activity.
##IRS Enforcement Efforts
Despite facing staffing and budget challenges, the IRS has implemented measures to tackle non-filers more effectively since receiving funding from the Inflation Reduction Act. This includes hiring thousands of staff for customer service, account management, and collections.
##Moving Forward
While issuing notices about unpaid taxes is just the first step in IRS enforcement, the true challenge lies in engaging with taxpayers and their representatives post-notice. By targeting high-end taxpayers and improving compliance, the IRS aims to recover significant unpaid taxes and bolster overall tax revenue. IRS Warns Non-Filers to Take Immediate Action
The IRS is sending out warnings to non-filers, stressing the importance of taking swift action to avoid facing harsh penalties and enforcement measures. According to former IRS official Werfel, these individuals could be hit with failure to file penalties, failure to pay penalties, and interest fees if they fail to act promptly.
Enforcement Measures on the Horizon
Non-filers run the risk of facing enforcement steps such as tax liens if they do not respond within an eight-week window after receiving the warning letter. The IRS aims to crack down on tax evasion within high-income households and businesses, with a particular focus on collecting unpaid back taxes.
Increased Scrutiny on Tax Compliance
The IRS has already collected close to $500 million in delinquent taxes from high-net-worth households through undisputed tax debts. Recent audits targeting companies and partnerships claiming write-offs on corporate jets have been announced, showcasing the agency’s efforts to ensure tax compliance among all entities.
Criminal Consequences for Non-Filers
In extreme cases, failure to file tax returns can lead to criminal charges. However, the IRS emphasizes that criminal outcomes are typically a last resort after exhausting other steps in the process. Despite this, the IRS’s criminal investigation division initiated 251 investigations into non-filer cases in the last fiscal year, with average prison sentences of 28 months for those convicted.
Stay Compliant to Avoid Severe Consequences
To evade severe penalties and potential criminal charges, recipients of IRS warning letters should act promptly and submit any outstanding tax returns. The IRS’s crackdown on tax evasion underscores the need for individuals and businesses to stay compliant with their tax obligations.
