Rich Americans are still avoiding the IRS crackdown on non-filing

Tens of thousands of wealthy Americans are not filing tax returns despite IRS efforts to get them to comply, as it is only a misdemeanor not to file a return compared to filing false returns which is a felony. This lack of consequence may be leading many millionaires to take the risk of not filing their taxes. The IRS has been sending notices to high-income non-filers, urging them to file returns. Renewed investigations have identified wealthy taxpayers who have not filed since 2017. While progress has been made in getting some non-filers to file returns, there are still many cases to pursue. The IRS has reported that millions of dollars are owed in back taxes by wealthy non-filers. However, few of them have faced legal consequences for their non-compliance. The IRS criminal investigation unit has only 62 open tax investigations for non-filers out of 25,000 cases. The Treasury Department has proposed reclassifying misdemeanors for chronic non-filers as felonies in order to increase federal revenues and deter tax evasion. This proposal aims to hold high-income taxpayers who repeatedly fail to file tax returns accountable with more severe penalties. By increasing criminal penalties for wealthy non-filers, the Treasury believes it can promote voluntary compliance and reduce the tax gap caused by those who do not pay their taxes.

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