Rich Tax Cheats Given a Free Pass by IRS

Jun 25, 2020 | Blog

The Internal Revenue Service has left tens of billions of dollars on the table by failing to pursue rich Americans who have refused to file tax returns. The IRS Treasury Inspector General has discovered that almost 880,000 high-income filers did not submit returns for the tax years 2014 through 2016, ultimately failing to pay a cumulative $4.7 billion in taxes during that time. Our tax attorneys have discovered that an additional report revealed that the Agency had not even attempted to collect tax money from numerous individuals in this particular group of filers.successful businessman

High-income earners are those who have a yearly household income of at least $100,000. Nevertheless, IRS compliance personnel stated that over 326,000 of these cases were never sent to the enforcement system to be worked on. In addition, according to the Treasury Inspector General for Tax Administration (TIGTA), approximately 42,600 of these cases were closed with no further scrutiny.

Lawmakers Voice Concerns

The situation has lawmakers from both sides of the aisle voicing concerns, and many want the IRS to ensure that its enforcement efforts are being conducted with fairness across all income groups. They are now after information from the IRS about its efforts to make high-income filers comply with their tax responsibilities.

Sen. Chuck Grassley (R-IA), who is the Senate Finance Committee Chairman, stated that no filers, regardless of their income level, should ever think that it is safe to cheat on a tax return. His position was made clear in a letter to Charles Rettig, who is the IRS’s Commissioner.

Many tax lawyers would confirm that Congress has long voiced concerns about what is commonly referred to as the “tax gap,” which is essentially the total amount owed to the IRS versus the amount that is actually paid on time.

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TIGTA Reports an Eye Opener

According to TIGTA’s report, the IRS has stated that although those with higher incomes do not make up the largest percentage of non-filers, they do account for the majority of monies owed to it. The report also added that the IRS should take further action to force such individuals into compliance.

The IRS is generally not pursuing outstanding cases due to limited resources. Sen. Ron Wyden (D-OR), who is on the Senate Finance Committee, reprimanded Republican lawmakers for seeking IRS budget cuts over the past ten years, stating that the IRS was in need of additional funding, not cuts.

Additionally, Chairman of the House Ways and Means Committee Richard Neal (D-MA) wrote to Treasury Secretary Steven Mnuchin he stated that the IRS requires more resources, pointing out that it is expensive and more difficult to audit high-income taxpayers, which he claims has resulted in disproportionately lower audit rates for the very people who owe the most money.

Bloomberg News reported earlier this month on the subject, bluntly stating that “rich tax cheats” have not been appropriately pursued by the IRS.

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The IRS Does not Respond to Media Inquiries

Our tax lawyers have found that the collective amount owed is estimated at $24.9 billion and may not be pursued for a significant amount of time in the future as resources decline.  The IRS did not respond immediately when asked by the media to make a statement, but agreed with the suggestion to prioritize collecting from non-filers. If you have questions about your tax return or the amount of taxes you may owe for any given year, contact one of our tax attorneys without delay.

 

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