Our tax attorneys have learned that on Monday, two IRS officials stated that the Internal Revenue Service plans to resume in-person visits to individuals who have not filed or owe back taxes. Agents plan to once again knock on doors of high-income earners who may have failed to file. The agency appears to believe that certain taxpayers who have been non-compliant have been using the chaos of the pandemic in an effort to “fall through the cracks.” Deputy Chief of IRS Criminal Investigations James Robnett said on Monday that they will be knocking on doors in the coming months and asking questions to ensure the compliance of high-income non-filers and those who owe back taxes.
Investigations Once Delayed Are Now Underway Again
Since February, IRS agents have been following up on taxpayers earning $100,000 per year or more, but who have failed to file a return. Certain efforts were paused or delayed due to the Covid-19 crisis, but according to tax lawyers who have been following the story, those efforts will once again be resumed and expanded. Those with tax problems and individuals who owe back taxes should be aware that the pandemic will no longer stop the aforementioned efforts of the IRS.
At an American Institute of CPAs event, Darren Guillot confirmed that wealthy individuals attempting to avoid their tax bills will once again be contacted in person by IRS agents. Guillot is an IRS Deputy Commissioner for Operations and Collections. However, it must be noted that $100,000 in Gross Income does not make you wealthy in the San Francisco Bay Area. $100,000 is hardly enough income to manage the sky high cost living in San Jose and around Silicon Valley.
Several Hundred Inquiries Launched by the IRS in Fiscal Year 2020
In the 2020 fiscal year, the IRS began 279 investigations regarding individual taxpayers who failed to file returns. This effort resulted in 96 indictments and 146 cases being recommended for prosecution. Of the indictments, 80 people were convicted and sentenced to an average of three years in prison.
The IRS has directed its efforts toward identifying an estimated nine million people who failed to file a tax return in 2020. It is not clear how many taxpayers would have filed if the pandemic had not occurred. Nevertheless, person-to-person contact is usually the final step taken by the IRS before its agents pursue more serious action, such as launching criminal investigations. For this reason, filing back taxes is important, as certain criminal consequences may be avoided, even if the return is filed late. Not filing at all can result in more serious charges. Although the IRS agents will approach with certain level of professionalism and courtesy, they are not there to help you. IRS Revenue Officers are tax collectors, and the process is still adversarial, and must be approached with great care. It is prudent to speak with a tax professional as soon as you hear from the IRS, or ideally before you are even contacted.
Relief Offered to Certain Filers Depending on Circumstances
The IRS is willing to work with certain individuals who owe back taxes or who haven’t filed a return, provided they file the appropriate documents prior to a visit from the IRS. Even if the amount owed is beyond the person’s ability to pay at the moment, payment arrangements can sometimes be worked out, resulting in fewer penalties and no legal action. IRS Fresh Start Initiative also offers various options for resolving the tax bill.
In the opinion of many tax experts, the simple message from agent James Robnett is “file now.” Those facing tax problems, people who owe back taxes, or individuals who need to stop IRS harassment should contact one of our tax attorneys as soon as possible for expert advice.
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