The IRS Ratchets up Pressure on the Wealthy

The IRS Ratches up Pressure on the Wealthy

According to the Journal of Accountancy, the IRS has identified 125,000 high-income taxpayers who have failed to file at least one tax return since 2017. Some 25,000 of these have income over $1 million, while 100,000 are in the $400,000 to $1 million bracket. These people have been sent letters asking for an explanation of the failure to file.  Penalties and back taxes are the likely next steps for them.

The targeted taxpayers have been identified by third party information received by the IRS, such as Forms W-2 and 1099, that indicate their income falls in this range. 

IRS Commissioner Danny Werfel said of the effort: “The IRS has known these people are out there, and they involve some very prosperous households. But we didn’t have the staffing or the resources to pursue these cases, which take time and staff hours.” The staffing now has been made available pursuant to the Inflation Reduction Act.

Those who receive a letter will have eight weeks to respond. This is not something to be ignored. Failure to respond could lead to collection efforts, a levy on wages or a bank account, tax penalties, even criminal prosecution.

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