Watch Out: IRS Launches Aggressive Campaign Targeting Wealthy 'Non-Filers'

By Maria Angelino | Saturday, 02 March 2024 09:20 PM
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The Internal Revenue Service (IRS) has announced a new initiative aimed at high-income taxpayers who have not filed federal returns since 2017.

The agency will begin sending letters to these "non-filers" this week, with the initial round targeting those with earnings ranging from $400,000 to over $1 million.

Previously referred to as CP-59 notices, these letters will be dispatched to an estimated 20,000 to 40,000 non-filers weekly, as per the plan revealed on Thursday. The IRS has urged recipients to act promptly to prevent further letters, increased penalties, and more stringent enforcement measures. Non-filers can find additional information about overdue returns on the IRS website.

IRS Commissioner Danny Werfel, during a press briefing, urged non-filers to rectify their situation. "If someone hasn't filed a tax return, this is the time to make it right," he said. Werfel also mentioned that due to staffing issues, the non-filer program has been inconsistently operational since 2016.

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The penalty for failing to file is 5% of the owed amount per month, with a maximum limit of 25% of the total tax bill, as per IRS regulations. An additional interest-based penalty is also applicable, calculated based on the current interest rate.

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The IRS has recommended non-filers to consult with a tax professional to file overdue returns and compute taxes owed, penalties, and interest.

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This latest initiative coincides with the IRS's efforts to reverse the "historically low audit rates" of large corporations, complex partnerships, and high-income earners. The audit rate for taxpayers earning $1 million or more was a mere 0.7% in 2019, a significant drop from 7.2% in 2011, as reported by the IRS.

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While the exact amount the IRS expects to recover through the revamped non-filer program is uncertain, the agency estimates that there could be "hundreds of millions of dollars" in unpaid taxes from these cases. "This is a very material amount of money that is being left on the table," Werfel stated on Thursday.

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