The IRS has launched a new initiative targeting high-income individuals who have not filed tax returns since tax year 2017. This IRS initiative is being funded by the Inflation Reduction Act. Currently, there are 125,000 taxpayers in the purview of the IRS (25,000 whose income exceeds $1 million and the remaining 100,000 whose income is between $400,000 and $1 million currently). Taxpayers should expect to see notices within the next couple of weeks.
Individuals who receive those IRS notices should not ignore them. Failing to respond to the IRS could cause additional penalties and may cost the taxpayer the right to appeal any assessments made by the IRS on an administrative level. Taxpayers should promptly reply to the IRS to ensure that they are able to negotiate the best possible result for themselves. In some circumstances, the failure to reply could even lead to a criminal investigation. If a taxpayer responds to the IRS, that taxpayer will have the opportunity to discuss with the IRS: the missing returns, potential deductions, and perhaps save money by reducing penalties.
If the taxpayer does not respond and the IRS makes the assessment, then (1) collection activity will be pursued and (2) the taxpayer will not have the opportunity to dispute the assessment in the U.S. Tax Court. In that situation, the taxpayer would be required to pay the assessed liability and then attempt to sue the IRS for a refund in the U.S. District Courts.
If you receive a notice from the IRS regarding an audit or non-filing, feel free to reach out to us for help. Robb Longman’s extensive background in business law, corporate law, and tax law provides Mr. Longman with the ability to advise his clients on all tax controversy and audit issues including the Inflation Reduction Act. Mr. Longman has testified before the Maryland House of Delegates on tax matters and is currently the Secretary of the American Bar Association’s Tax Section . Mr. Longman regularly works with business and individual clients on all types of corporate and business matters to help them address their legal concerns.