Treasury IG: 879,000 High-Income Earners Didn’t File Tax Returns
Facebook Twitter Flipboard Liberals are almost right when they say the rich don’t pay their fair share of taxes. Truth is, SOME of the rich didn’t pay their fair share of taxes—because they didn’t file tax returns. A report by the Treasury Dept. inspector general reveals that from fiscal years 2014 through 2016, about 879,000 […]
Liberals are almost right when they say the rich don't pay their fair share of taxes. Truth is, SOME of the rich didn't pay their fair share of taxes---because they didn't file tax returns. A report by the Treasury Dept. inspector general reveals that from fiscal years 2014 through 2016, about 879,000 high-income Americans did not file taxes, and the IRS didn't even go after them for their aggregate taxes due of $45.7 billion. High-income nonfilers.
The report breaks down the 879K as follows (the bullet points were taken from the report embedded below):
- The IRS did not work 369,180 high-income nonfilers, with an estimated tax due of $20.8 billion. Of the 369,180 high-income nonfilers, 326,579 were not placed in inventory to be selected for work, and 42,601 were closed out of the inventory without ever being worked.
- In addition, the remaining 510,235 high-income nonfilers, totaling estimated tax due of $24.9 billion, are sitting in one of the Collection function's inventory streams and will likely not be pursued as resources decline.
- The IRS removed high-income nonfiler cases from inventory, resulting in 37,217 cases totaling $3.2 billion in estimated tax dollars
The IG seems to scold the IRS at the very beginning of the report:
- The intentional failure to file Federal tax returns is a crime. Nonfiling of tax returns can also be subject to civil fraud penalties.2 In the past, the Internal Revenue Service (IRS) has focused on the tax compliance of high-income individuals because their noncompliance can have a significant corrosive effect on tax administration. Intentional nonfiling of tax returns by those with significant financial resources and sophistication is a brazen form of noncompliance.
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According to IRS procedures, high-income nonfiler cases present a high compliance risk; therefore, these should typically be selected for review and issued a notice. Pursuing nonfilers is one of the IRS’s most efficient enforcement strategies because issuing nonfiler notices can be a cost-effective tool that requires little more than automated notices. Previous IRS research studies from decades ago noted that at that time, the IRS pursued most nonfiler leads. However, with some exceptions, that no longer appears to be the case.
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The top 100 highest-earning nonfiling individuals in each of the three years collectively owe $10 billion. In 99 of those 300 cases, the IRS did not even place the case into the investigation inventory and 44 were closed without any effort to work them. The remaining 157 cases were technically in the queue, but IRS conceded it was unlikely to work them due to a decline in available resources.
The report ends with recommendations regarding how the IRS should go after the high-income nonfilers.
Although I am not high-income and I file every year, it seems to me that the IRS should leave the little guys alone, and go after the high-income non-filers to get a hefty sum for the federal pocketbook.
Read the full report below:
Treasury Dept. Ig Report-Public Doc by Jeffrey Dunetz on Scribd