IRS targets those with high incomes who haven’t filed tax returns, some since 2017

investmentnews.com:

With tax filing season underway for 2024, the Internal Revenue Service is chasing 125,000 case of people with six- or even seven- figure incomes who have not filed their returns, some since 2017.

The agency says that this includes 25,000 cases with incomes of more than $1 million and 100,000 with incomes of between $400,000 and $1 million. As some people will not have filed for multiple years, the actual number of individuals will be smaller.

Collectively, third party data (such as Forms W-2 and 1099s) reveals these people’s financial activity is $100 billion and the most conservative estimate puts their unpaid tax at hundreds of millions of dollars.

The IRS has begun sending letters to these non-compliant high-income individuals thanks to funding from the Inflation Reduction Act. While similar letter campaigns have been undertaken previously, funding cuts has made this inconsistent.

IRS Commissioner Danny Werfel said that as millions of Americans do the right thing and pay their taxes, the agency cannot tolerate those that do not even do their civic duty of filing a tax return.

“The IRS is taking this step to address this most basic form of non-compliance, which includes many who are engaged in tax evasion. This is one of the clearest examples of the need to have a properly funded IRS. With the Inflation Reduction Act resources, the agency finally has the funding to identify non-filers, ensure they meet this core civic responsibility, and ultimately help ensure fairness for everyone who plays by the rules.”

The IRS has collected nearly $500 million in ongoing efforts to recoup taxes owed by 1,600 millionaires with work continuing in this area.

Failure-to-file penalty amounts to 5% of the amount owed every month – up to