Lawmakers worry IRS is giving rich people a pass

https://thehill.com/policy/finance/501440-lawmakers-worry-irs-is-giving-rich-people-a-pass

By Naomi Jagoda - 06/07/20 09:30 AM EDT


Lawmakers worry IRS is giving rich people a pass
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Lawmakers on both sides of the aisle are raising concerns after an IRS watchdog found the agency has not addressed hundreds of thousands of high-income individuals who haven’t filed tax returns.

In a report released this past week, a government watchdog said there were about 880,000 high-income non-filers who, as of December 2018, still hadn’t satisfied a filing requirement, amounting to an estimated $45.7 billion in unpaid taxes. Compliance personnel at the IRS have not worked on many of these cases, the Treasury Inspector General for Tax Administration (TIGTA) said in its report about non-filers for tax years 2014-2016.

Lawmakers want the IRS to ensure that its enforcement efforts are fair across income groups. They’re now seeking information from the agency about its efforts to get high-income people to comply with their tax obligations.

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Congress has long had concerns about the “tax gap,” the difference between the amount of taxes owed and the amount paid on time. The IRS says that high-income non-filers, while a small portion of the non-filing population, are responsible for a majority of the tax gap that is due to non-filing, according to TIGTA’s report.

The IRS defines high-income non-filers as those with income of at least $100,000 who have not filed tax returns.

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In the group analyzed by TIGTA, about 327,000 were never flagged for potential further review and about 43,000 were shelved or otherwise taken out of the IRS's inventory streams without any additional scrutiny. The remaining cases are in inventory streams but haven't been resolved, and TIGTA said the IRS generally is not pursuing outstanding cases due to limited resources.

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Sen. Ron Wyden (Ore.), the top Democrat on the Senate Finance Committee, criticized Republicans for pursuing IRS budget cuts during much of the last decade, and said the agency needs more funding.

“As a result of Republicans' years-long effort to gut the IRS and protect their donors from scrutiny, wealthy tax cheats stole nearly $46 billion in just three years by refusing to even file their taxes,” Wyden said in a statement. “What's worse, the IRS did little to nothing to pursue these tax cheats.”

“Investments in health care, infrastructure and education will be perpetually short-changed if paying taxes is essentially voluntary for those at the top,” he added. “The IRS needs historic investments to address this crisis.”

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He said the IRS has lost nearly one-third of its enforcement personnel since fiscal 2010, and that the agency’s budget proposal for fiscal 2021 calls for more money to beef up enforcement. Hylton added that recent budget increases allowed the IRS to hire more enforcement staff last year, but only to the tune of increasing compliance staff by 1 percent.

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