IRS Commissioner Daniel Werfel speaks throughout an IRS occasion in McLean, Virginia, on Aug. 2, 2023.
Alex Wong | Getty Photos
The IRS has unveiled plans to focus on “non-filers” with a brand new spherical of letters, beginning with high-income taxpayers who have not filed federal returns since 2017.
Beginning this week, the company will ship letters to rich non-filers, with the primary batch going to these incomes $400,000 to greater than $1 million.
Previously referred to as CP-59 notices, the letters will go to between 20,000 and 40,000 non-filers per week, based on plans introduced Thursday. The IRS stated recipients ought to take “rapid motion” to keep away from extra letters, greater penalties and “stronger enforcement measures.” Non-filers can study extra about past-due returns right here.
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“If somebody hasn’t filed a tax return, that is the time to make it proper,” IRS Commissioner Danny Werfel instructed reporters throughout a press name. Citing staffing points, he stated the non-filer program has solely run sporadically since 2016.
The failure-to-file penalty is 5% of the quantity owed per 30 days, capped at 25% of the tax invoice, based on the IRS. There’s additionally an interest-based penalty primarily based on the present rate of interest.
The company urges non-filers to work with a tax skilled to file past-due returns and calculate taxes owed, penalties and curiosity.
‘Traditionally low audit charges’ for greater earners
The brand new wave of letters comes amid IRS plans to reverse “traditionally low audit charges” of huge companies, advanced partnerships and better earners.
The audit fee for taxpayers incomes $1 million or extra was 0.7% in 2019, in comparison with 7.2% in 2011, based on the IRS.
Whereas it is unclear precisely how a lot the IRS will acquire through the revamped non-filer program, the company estimates there may very well be “a whole lot of tens of millions of {dollars}” in unpaid taxes from these circumstances.
“This can be a very materials amount of cash that’s being left on the desk,” Werfel stated Thursday.
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