With increased capacity to perform core tax administrative work, the IRS has launched an initiative aimed at high-income taxpayers who’ve failed to file federal income tax returns.

Beginning this week, IRS compliance letters—known as CP-59 Notices—will be dispatched on more than 125,000 cases where tax returns have not been filed since 2017. These cases have all been identified by the IRS through third-party information reporting (i.e. Forms W-2 and 1099), with a focus on individuals who received income in excess of $400,000 (in many cases in excess of $1 million) from 2017 through 2021, but failed to file any corresponding tax return. This new non-filer initiative is designed to address this most basic form of non-compliance, which includes many who are actually engaged in tax evasion.

Taxpayers who find themselves on the receiving end of one of these letters should take immediate action to avoid further escalation of the matter. Failure to respond promptly may result in subsequent notices, increased penalties, and, in some cases, a limitation on certain procedural rights. Taxpayers who repeatedly fail to file may also be subject to significant penalties, enforcement action, and/or criminal prosecution.

Swift action in collaboration with a tax expert can help navigate through these challenges and mitigate potential consequences effectively.

IRS launches new effort aimed at high-income non-filers; 125,000 cases focused on high earners, including millionaires, who failed to file tax returns with financial activity topping $100 billion | Internal Revenue Service

Thank you Michelle E. Espey for this week’s Tax Tracker!