IRVINE,
Calif., May 9, 2024 /PRNewswire/ -- The Internal
Revenue Service (IRS) targets high-income earners because they have
a significant impact on tax revenue. Non-compliance among
high-income individuals can disproportionately affect lower-income
taxpayers who may have fewer resources to navigate their tax
obligations.
In February of 2024, the IRS launched a new effort to go after
high-income earners who have not filed their tax returns. This
effort focuses on more than 125,000 cases dating back to 2017.
Compliance letters have been sent to many of those who are being
targeted. If recipients do not respond, they may face audits, or
criminal tax investigations followed by serious civil and criminal
penalties.
Overview of the New IRS Initiative
The IRS has launched a new initiative to address non-compliance
among high-income taxpayers who have failed to file federal income
tax returns. This effort is funded by the Inflation Reduction Act
and targets a multitude of taxpayers who have missed returns since
2017. Many of these cases involve individuals with incomes
exceeding $1 million.
Compliance Letters and Initial Enforcement
Measures
The IRS began sending compliance letters, also referred to as
"CP59 notices," to non-filers in late February 2024. These letters urge recipients to
take immediate action to avoid potential penalties. Failure to
respond to these letters may result in stronger enforcement
actions, including audits, collection measures, and potential
criminal tax prosecution which can result in felony tax charges
for Spies Evasion. The IRS may also file Substitutes for
Returns (SFRs) for taxpayers who repeatedly fail to respond.
Potential Revenue
As previously discussed, this new initiative targets individuals
with significant financial resources. While the exact amount of
unpaid taxes at issue is uncertain, the IRS estimates potential
revenue gains from this initiative to be in the hundreds of
millions of dollars.
Motivations
This initiative is part of a broader IRS effort to improve tax
compliance among high-income individuals, complicated partnerships,
and large corporations. Prior to receiving funding from the
Inflation Reduction Act, budget cuts limited the IRS' ability to
address complex tax evasion schemes effectively. Now, the IRS has
ramped up its enforcement efforts with increased resources.
Potential Consequences of Non-Compliance
It is crucial for non-filers to have our Dual-Licensed Tax
Lawyers & CPAs assess their tax issues promptly so that they
may avoid serious penalties. Failure to file tax returns can lead
to harmful consequences such as wage garnishment and the assessment
of federal tax liens. In severe cases, taxpayers who do not respond
to IRS notices may even face criminal tax prosecution.
How Does the IRS Catch High-Income Tax Evaders?
Many perpetrators of tax evasion schemes do not consider the
many ways in which they may be caught. In fact, the IRS utilizes a
multitude of different strategies to uncover these illegal
schemes.
Advanced Data Analysis and Artificial
Intelligence
The IRS uses advanced data analysis techniques and artificial
intelligence (AI) to identify potential instances of tax evasion.
By analyzing vast amounts of financial data, the agency can
pinpoint irregularities in income reporting and detect potential
evasion schemes. AI algorithms also help streamline this process
and enable the IRS to identify high-risk taxpayers more
efficiently.
Audits and Enforcement Measures
Audits and enforcement measures are often deployed to catch tax
evaders. During audits, the IRS thoroughly examines taxpayers'
financial records and transactions to ensure compliance.
Collaboration with Other Agencies
The IRS also collaborates with other federal and state
government agencies and law enforcement entities to catch tax
evaders. Information sharing between agencies allows for a
comprehensive assessment of taxpayers' financial activities and
facilitates the identification of potential misconduct.
Whistleblower Program
Furthermore, the IRS's whistleblower program incentivizes
individuals with insider knowledge of tax evasion to come forward
and report wrongdoing. Whistleblowers may receive monetary rewards
for providing credible information leading to the recovery of
unpaid taxes. This program can serve as a very valuable tool for
identifying tax evasion among high-income individuals and
corporations.
International Cooperation and Information
Exchange
The IRS also collaborates with tax authorities in other
countries to combat tax evasion on a global scale. The IRS may gain
access to offshore financial data through information-sharing
agreements. In turn, they may identify taxpayers who are hiding
income or assets overseas.
Specialized Units and Task Forces
Lastly, the IRS maintains specialized units and task forces
dedicated to investigating complex tax evasion cases, including
those involving high-income taxpayers. These units consist of
highly trained agents and forensic accountants skilled in
unraveling sophisticated schemes.
Can You Go to Prison for Tax
Evasion?
Tax evasion can lead to imprisonment under certain
circumstances.
For instance, tax evaders can face prison time for intentionally
and willfully evading taxes by underreporting income, overstating
deductions, or engaging in other fraudulent activities to reduce
tax liabilities and for non-filing, especially where Spies Evasion
Factors are present.
The government will typically evaluate the severity of the
offense at issue, and the amount of taxes evaded when assessing the
possibility of incarceration. Typically, imprisonment for tax
evasion is generally reserved for cases involving significant
fraud or repeated non-compliance.
How Our Tax Lawyers & CPAs Can Help with Your
Case
Our team can provide invaluable assistance to individuals and
businesses facing tax-related issues. Our legal professionals
possess extensive knowledge of tax laws and regulations. This
enables us to offer strategic advice and representation to those
dealing with the IRS.
For example, we can help our clients navigate complex tax codes,
interpret statutes, and ensure compliance with tax obligations
while maximizing available deductions and credits. We can also
provide guidance on tax planning strategies to help avoid potential
pitfalls.
Moreover, we can represent our clients in audits, appeals, and
tax court proceedings. During these proceedings, we will advocate
fiercely for defendants' best interests and will negotiate for
settlements when necessary. Overall, our guidance and advocacy can
help individuals and businesses effectively resolve their disputes
while mitigating possible penalties.
Call Our Law Firm for Help Resolving Your Tax
Problems
Get support from our Dual-Licensed Tax Lawyers & CPAs at the
Tax Law Offices of David W. Klasing by dialing (800) 681-1295
or clicking here to schedule a reduced rate initial
consultation.
See our Non-Filer Q and A Library
Public Contact: Dave Klasing Esq.
M.S.-Tax CPA, dave@taxesqcpa.net
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