Tim’s Tax News on the Tenth – December 2020

The IRS recently announced that its agents would soon resume knocking on the doors of suspected high-income tax avoiders after the coronavirus pandemic passes. The deputy chief of IRS Criminal Investigation, James Robnett said that the IRS agents “will be knocking on doors in the coming months to make sure these high-income non-filers comply.”

IRS agents since February 2020 have been following up with high-income individuals who earned at least $100,000.00, but failed to file income tax returns. Some IRS efforts were delayed or paused because of the covid-19 pandemic, but the IRS plans to resume and even expand them once the health crisis rescinds said Darren Guillot, the IRS deputy commissioner for collections and operations support.

In fiscal year 2020, the IRS launched 279 investigations into individuals who had failed to file tax returns, and to date, the IRS has recommended 146 individuals for criminal prosecution. So far of those 146 cases, there have been 96 indictments and 80 individuals have been sentenced for an average of 36 months in prison. The IRS Criminal Investigation Division has one of the highest conviction rates in federal law enforcement − at 90.4%.

The IRS has concentrated its efforts in the last year on identifying an estimated 9 million individuals who have not filed a tax return. The IRS agent’s contact is typically the final step before the IRS pursues more severe action, such as criminal or civil cases against that individual. The focus on high-income non-filers comes as the IRS is initiating more criminal investigations.

The IRS launched 2,596 criminal probes in fiscal year 2020, the first annual increase after six consecutive decreases. In the 2013 fiscal year, when that decline began, the IRS Criminal Investigation division opened 5,314 cases, the highest number in the past 15 years, according to IRS data. (More detail can be found in the Criminal Investigation Division's annual report PDF).

The IRS said it identified $2.3 billion in tax fraud, up from $1.8 billion in the year prior. While this increase is good for the government coffers, the Treasury Inspector General for Tax Administration recently released a report that said 879,415 high-income individuals who did not file returns cumulatively failed to pay $45.7 billion in taxes from 2014 to 2016.

If you would like more details, please do not hesitate to call our office. Our office has been successful in helping taxpayers with IRS and IDOR collection problems for over 28 years. If you have a tax or debt problem, please contact me at 847-705-9698 or thughes@lavellelaw.com and find out how we can help you.

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Lavelle Law, Ltd. is registered with the Illinois Department of Financial and Professional Regulation as an approved continuing education provider for CPE for CPAs and Enrolled Agents. If your organization is seeking CPE courses in the area of Business Law, Innocent Spouse Relief, IRS Collections, Tax Scams (including ID Theft), or other areas in tax law that can be taught at your office, please contact me at thughes@lavellelaw.com