Thousands of Millionaires Haven't Filed Tax Returns for Years, IRS Says
Julie Zauzmer Weil The Washington Post
Thousands of people making more than $400,000 a year have not filed tax returns since 2017, according to the IRS. (photo: AP)
About 125,000 notices will be sent to high-income earners, including 25,000 people with income more than $1 million, the tax agency said
That changes now, the tax agency announced Thursday. The IRS will send notices to thousands of people who made more than $400,000 and did not file returns in at least one year from 2017 to 2022, the first step to collecting any tax owed.
About 25,000 cases involve people whose income is known to the agency to be above $1 million, IRS Commissioner Danny Werfel said. About 100,000 instances stem from people with income from $400,000 to $1 million, as reported to the IRS by their employers and banks.
Although the IRS will send out 125,000 notices, the actual number of taxpayers involved may be less, as many of them failed to file in multiple years.
If they don’t file within about two months of getting the letters, the IRS can take further action, including eventually filing a “substitute” tax return on the person’s behalf and then levying money from their paycheck or bank account to collect the taxes owed.
“When people don’t file their taxes, they need to know there’s a consequence,” Werfel said.
Failing to file one year can lead to a snowballing effect, a lawyer said. “They forget one year, and then the next year, they say, ‘Well, if I file now, I’ll get in trouble for the year before,’ … Pretty soon, 15 or 20 years later, they’re in a lot worse trouble,” said Rob Kovacev, a former Department of Justice attorney who said that more than 15 years ago, before IRS budget cuts, his docket was full of non-filer cases, some for very rich people.
As Congress slashed the IRS’s funding in the last decade, the agency’s shrinking staff did less to enforce tax compliance — including one of the most basic tasks, simply sending letters to people who fail to file their tax return. Werfel said the “non-filer program” last operated in 2016, with only sporadic attempts since then to contact non-filers.
He described that lapse as “one of the clearest examples of the need to have a properly funded IRS.” In 2022, Congress granted the agency an additional $80 billion over 10 years, though Republicans in Congress later clawed back $20 billion. The agency went on a hiring spree last year, which Werfel said gives the IRS enough workers to contact non-filers and process the returns once they’re filed, or pursue further action against those who don’t file.
