IRS Targets High-Income Nonfilers: A Wake-Up Call from Bay Area Tax Attorneys

Feb 28, 2024 | Blog

As your trusted Bay Area tax attorneys, we’re here to bring you the latest news that could impact your financial health. The IRS has recently turned its attention to high-income households that have failed to file their tax returns. This is a crucial reminder for everyone, especially those in need of San Jose tax lawyers, to stay on top of their tax obligations.

Unfiled Tax Returns

The IRS has begun sending out over 125,000 notices to high-income households about their unfiled tax returns. This move is part of the IRS’s efforts to improve compliance among high-income taxpayers, following the funding boost from the 2022 Inflation Reduction Act.

The majority of these notices are being sent to households with an estimated income between $400,000 and $1 million. Additionally, over 25,000 notices are being sent to households with an income of at least $1 million. These notices pertain to income tax returns that should have been filed as far back as 2018.

As experienced back taxes lawyers, we understand the implications of this development. The IRS already has certain tax forms from third parties, indicating that these nonfilers have received significant income. This suggests over $100 billion in financial activity that hasn’t been reported in a tax return.

IRS Identifies Nonfilers

The IRS has been able to identify these nonfilers thanks to these third-party forms. However, due to shrinking IRS staff and budget capabilities over the years, the program targeting nonfilers has only run sporadically since 2016.

The IRS has recently hired between 5,000 and 7,000 new staff members to provide customer service and account management. They have also added extra staff for collections. This means that the IRS is now better equipped to follow up on these notices and engage in correspondence with taxpayers and their representatives.

What to do if you have not filed tax returns in California

As IRS tax attorneys, we urge anyone receiving these letters to take immediate action. Failing to respond could lead to additional follow-up notices, higher penalties, and even stronger enforcement measures. These could include failure to file penalties, failure to pay penalties, plus interest, and even enforcement steps including tax liens.

If you’ve received one of these letters, don’t panic. Our team of San Jose tax lawyers is here to help. Contact us today for a consultation and let’s get those unfiled tax returns sorted out.