The IRS is cracking down on thousands of high-income earners who haven’t filed tax forms in years, in an effort that could yield hundreds of millions of dollars in unpaid taxes.
The tax agency said Thursday that it is starting to send letters to 25,000 people who earned more than $1 million a year but didn’t pay taxes between 2017 and 2021. The IRS is targeting another 100,000 people who earned between $400,000 and $1 million and didn’t file taxes during the same period.
The initiative is made possible by the additional funding the IRS received through the Inflation Reduction Act, the agency said in a statement. Through third-party sources such as 1099 forms, the agency has long been aware of high earners who had failed to file their taxes, but in recent years the IRS has lacked the resources to pursue them.
“Without adequate resources, the IRS non-filer program has only run sporadically since 2016 due to severe budget and staff limitations that didn’t allow these cases to be worked,” the agency said. “With new Inflation Reduction Act funding available, the IRS now has the capacity to do this core tax administration work.”
The third-party resources the IRS is relying on indicate that the economic activity involved exceeds $100 billion, which could generate hundreds of millions of dollars in payments if and when the cases are cleared up.
“If someone hasn’t filed a tax return for previous years, this is the time to review their situation and make it right,” said IRS Commissioner Danny Werfel. “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.”
