In 2021, a report by the Treasury Inspector General for Tax Administration (TIGTA) identified some interesting statistics. Approximately 685,555 taxpayers had a balance due in May of 2021. Of those, the taxpayers who reported a gross income of $200,000 owed a combined $38.5 billion in taxes. While it would be logical that those with higher incomes could be natural targets for an IRS civil audit, the report found that the system for collecting taxes from these individuals was not as efficient as it could be. An additional report found that the IRS collected less than 50 percent of the tax debt owed by these taxpayers within 52 weeks of assignment for collection.
In 2020, the IRS had already announced initiatives to boost collection from high-income non-filers. Some of the tools identified by the IRS to enhance those efforts include:
The tools and capabilities of the IRS to collect past-due taxes should not be taken lightly. The IRS basically has the ability to calculate and create your delinquent tax returns. Those returns do not include deductions for expenses and other tax credits you may have earned. You are provided an assessment when the return is prepared for the tax due to the IRS. While you can then choose to file a return, the likelihood of continued IRS review is high and could lead to an IRS audit.
While it is not clear that the IRS is making good on its promise to pursue high-income non-filers, it is clear that eventually failure to file will be noticed and a remedy applied. If evidence of evasion is identified, tax fraud or other tax crimes could be on the table.
If you missed filing one or more tax returns, speak to an experienced tax attorney about your options. Your business is your own—until the IRS is involved.
Serving local and international clients from offices in Chicago and Cleveland, the tax group at Robert J. Fedor, Esq., LLC helps you respond strategically to questions about IRS audits, offshore tax investment, or allegations surrounding fraudulent tax returns. Call 800-579-0997 or contact us today.