The Internal Revenue Service watchdog TIGTA says the IRS is ignoring hundreds of thousands of delinquent high-income taxpayers who owe billions of dollars in total
The IRS removed high-income nonfiler cases from inventory, resulting in 37,217 cases totaling $3.2 billion in estimated tax dollars that will not likely be worked by the IRS.
Here’s the breakdown that shows that the big dollars are at the top, but way more nonfilers owe in the $50,000 to $100,000 range.High-income nonfilers, a small percentage of the nonfiler population, reflect a higher noncompliance risk than other nonfilers, so resolving these cases generates a greater return on investment, TIGTA says. The IRS used to pursue most nonfiler cases, but with some exceptions, that no longer appears to be the case, and the number of nonfilers has been growing.
How does the IRS track down nonfilers in the first place? There’s third party reporting—those are forms sent to both the IRS and the taxpayer, including Form W-2 for wages, Form 1099-Misc. for self-employment income, and Form 1099-B for stock sales. The IRS also looks at past filers who later fail to file.
The IRS agrees that high-income nonfilers constitute a problem, and it is piloting programs to crack down, including compliance sweeps. In one pilot, it found that letters get more results than postcard notices. In another pilot, the IRS reached more nonfilers by pursuing just one year’s unfiled return, but that meant less revenue collected.
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