US IRS says it will pursue high-income earners who failed to file tax returns

By David Lawder

WASHINGTON (Reuters) - The Internal Revenue Service said on Thursday it will go after high-income earners who have failed to file tax returns in 125,000 cases since 2017, resurrecting a non-filer enforcement program that was idled for years by past budget cuts.

The IRS said that the $80 billion in funding over a decade from the 2022 Inflation Reduction Act has enabled it to hire sufficient staff to resume the mailing of non-filing notices to these individuals, including 25,000 with apparent income above $1 million.

The total "financial activity" generated by these non-filers tops $100 billion based on third-party documents, and unpaid tax liabilities could easily run into the hundreds of millions of dollars, IRS Commissioner Danny Werfel told reporters.

"With Inflation Reduction Act resources, the agency finally has the funding to pursue this core responsibility and ensure fairness for everyone who played by the rules," Werfel said.

The non-filer enforcement program has operated only sporadically since 2016 because of staff reductions prompted by more than a decade of budget cuts passed by Republicans in Congress, Werfel said. The agency needed to have sufficient staff to pursue collections of delinquent tax debts related to the notices.

It has hired up to 7,000 new customer service staff, account managers and collections staff and implemented new automation technology since the IRA funding was passed in 2022, enabling it to pursue high-income non-filers.

The agency said it is resuming the notices this week, with about 20,000 to 40,000 notices being sent each week.

(Reporting by David Lawder in Washington; Editing by Matthew Lewis)