IRS Commissioner Daniel Warfel speaks at an IRS event in McLean, Virginia, on August 2, 2023.
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The IRS has announced plans to target new letters to “non-filers,” starting with high-income taxpayers who have not filed a federal return since 2017.
The agency will send letters to wealthy non-filers starting this week, with the first mailings going to people with annual incomes of between $400,000 and more than $1 million.
formerly known as CP-59 precautionsUnder the plan announced Thursday, letters would be sent to between 20,000 and 40,000 unfilers each week. The IRS said recipients should take “immediate action” to avoid further letters, heavier penalties and “more aggressive enforcement actions.”Non-filers can learn more about past-due returns here.
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“If you haven’t filed a tax return, now is the time to get it right,” IRS Commissioner Danny Wuerfel told reporters at a press conference. He cited staffing issues and said the non-filer program has only been implemented sporadically since 2016.
According to the IRS, the penalty for failing to file is 5% of the monthly amount owed, with a cap of 25% of the tax owed. There is also an interest-based penalty based on . current interest rate.
The agency urges non-filers to work with a tax professional to file past-due returns and calculate any unpaid taxes, penalties and interest.
The new wave of letters comes amid the IRS’ plan to reverse “historically low audit rates” for large corporations, complex partnerships and high-income individuals.
The audit rate for taxpayers with income of $1 million or more was 0.7% in 2019, compared to 7.2% in 2011. I.R.S..
It’s unclear exactly how much the IRS will collect through the revamped nonfiler program, but the agency estimates these cases could result in “hundreds of millions of dollars” in unpaid taxes.
“This leaves a very significant amount of money on the table,” Werfel said Thursday.
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