The Internal Revenue Service (IRS) is intensifying its efforts to address non-compliance among high-income earners who have failed to file their tax returns in recent years.
Earlier this year, the IRS initiated a series of compliance notifications targeting individuals with incomes of $400,000 or more from years in which they did not submit their tax returns. This includes some who earned $1 million or more. The IRS urges recipients to file their overdue returns promptly or provide a valid explanation for their non-filing status. Failure to act could lead to additional notices, increased penalties, and more stringent enforcement actions.
Who is Affected?
The IRS’s crackdown is specifically targeting individuals for whom the agency has already received income documentation, such as W-2s or 1099s, but who have not filed their tax returns for the corresponding years. This initiative is designed to address the issue of non-filing by focusing on those who have reported significant income but failed to meet their tax obligations. The IRS is concentrating its efforts on missing returns for the tax years spanning from 2017 through 2021. By targeting these specific years, the IRS aims to address a significant backlog of unfiled returns and ensure compliance among high-income earners who have not fulfilled their tax duties during this period.
What You Should Do
If you are among those who need to file back taxes or address outstanding payments, consider these steps:
- Consult a Professional: Before submitting overdue returns, it’s wise to seek advice from a tax professional. They can guide you through various compliance options and help with potential penalty relief. For complex cases, especially those with potential criminal implications, hiring an experienced attorney is recommended.
- Understand the Timeframe: There is no statute of limitations. However, exceptions can apply, so it’s important to file all overdue returns as required.
- Explore Payment Options: If financial constraints have prevented you from filing, don’t delay any longer. Address what you can pay now and apply for an installment agreement with the IRS to cover the remainder. Waiting until you can pay in full can lead to more serious consequences.
- Negotiate the Amount Owed: You might be able to settle your tax debt for less than the full amount through an “offer in compromise,” especially if you can demonstrate financial hardship or that paying the full amount would be unfair due to exceptional circumstances.
- Seek Penalty Relief: In some cases, you might be able to reduce or remove penalties if you can show reasonable cause for your non-filing, such as serious illness, natural disasters, or other significant life events. The IRS’s “first-time abate” policy might also apply if it’s your first tax penalty.
For those who need assistance resolving penalties, the IRS Taxpayer Advocate Service is available in many cities and can help with complex cases.
If you have questions about your tax situation, don’t hesitate to seek professional advice to navigate these challenging issues effectively. We will be more than happy to provide any assistance you may need.
