In February 2020, the IRS announced that it would step up efforts to contact high-income taxpayers (defined as earning $100,000 or more per year), who in prior years have failed to file one or more tax returns. The IRS’s enforcement effort in 2020 was announced, in part, in reaction to a 2018 GAO study that showed a 40% decline in non-filer investigations since 2010. Indeed, by 2018, non-filer investigations declined to .8 million for individuals and .4 million for businesses. The decline in IRS non-filer investigations was a result of reduced IRS resources and funding.
Almost a year later, and as a result of the IRS’s efforts, tax practitioners are seeing an increase in non-filer inquiries. High net worth non-filer taxpayers and businesses who had gone undetected for years are suddenly finding themselves owing significant tax, penalties and, in some cases, facing criminal prosecutions.