IRS to Send Compliance Letters via Biden’s Inflation Act
TL/DR –
The Internal Revenue Service (IRS) is sending over 125,000 compliance letters to Americans who have not paid taxes, as part of efforts funded under the Inflation Reduction Act. The notices will cover tax years from 2017 through 2021 and will be sent to individuals who earned more than $1 million and did not file a return, as well as those with incomes between $400,000 and $1 million. The IRS identified these individuals using third-party information such as W-2 forms and 1099 forms, and anticipates the process could recover hundreds of millions of dollars in unpaid taxes.
The IRS notification to Americans Overdue on Taxes
The Internal Revenue Service (IRS) is sending over 125,000 compliance letters to Americans who have reportedly not paid taxes, as part of the Inflation Reduction Act’s budget expenditure. Details are available in an IRS news release.
Covered Tax Years
The CP59 notices of a failure to file will cover tax years from 2017 through 2021. The IRS plans to send 25,000 letters to Americans earning over a million dollars who did not file a return. Furthermore, over 100,000 letters will be sent to individuals earning between $400,000 and $1 million who also did not file.
Tracking Unpaid Taxes
Following a detailed investigation using third-party information such as W-2 forms and 1099 forms, the IRS identified these Americans who were paid income but did not file a tax return.
Expected Tax Revenue
While the IRS is unsure about the exact tax revenue it will gain, it anticipates that the overall financial activity recorded in these cases will exceed $100 billion. A conservative estimate suggests that there are hundreds of millions of dollars of unpaid taxes involved.
Push on Millionaires’ Tax Debt
The IRS is also focusing on millionaires who have not serviced their tax debt. Till date, it has collected nearly $500 million through targeting such individuals. The agency is leveraging artificial intelligence to scrutinize 75 of the nation’s largest partnerships.
Statements on Non-Compliance
According to IRS Commissioner Danny Werfel, failing to pay taxes is intolerable especially from those with higher incomes. David Kass, executive director of the nonprofit Americans for Tax Fairness, also pointed out how ridiculous it is that wealthy individuals fail to file a tax return.
IRS Hiring Spree
In the past year, the IRS has recruited about 5,700 individuals, as reported by Reuters.
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