IRS to resume home visits, increase new investigations after pandemic subsides

The IRS is expected to resume knocking on the doors of high-income people suspected of avoiding taxes after the coronavirus pandemic is over, Bloomberg News reported.

IRS officials in February announced that they were increasing efforts to follow up on individuals making at least $100,000 who have not filed their income tax returns. At an American Institute of Certified Public Accountants (AICPA) event, IRS deputy commissioner Darren Guillot said that some of these efforts have been postponed as a result of the pandemic but are set to resume and be expanded once the pandemic subsides.

“We’ll come knocking and asking,” James Robnett, deputy chief of IRS Criminal Investigation, said at the AICPA event, according to Bloomberg. “Even more, we will be knocking on doors in the coming months to make sure these high-income nonfilers comply.”

The Treasury Inspector General for Tax Administration issued a report earlier this year finding that about 880,000 high-income nonfilers in tax years 2014 through 2016 had an estimated $45.7 billion in unpaid taxes. The IRS responded to the report by saying it has increased resources to its nonfiler program since fiscal 2018.

In the past year, the IRS has focused on identifying about 9 million people who have not filed tax returns. The agency makes contact with nonfilers before taking harsher action such as initiating a criminal or civil case, according to Bloomberg.

According to Guillot, the penalties are much lesser if individuals behind on filing their tax returns voluntarily submit their returns before the IRS contacts them. He says late-payment fees are less expensive than the fines accrued for failing to file a tax return.

Robnett said at the AICPA event that the IRS launched nearly 300 investigations into people who failed to file income tax returns in fiscal 2020, with 146 recommended for prosecution. Ninety-six of those cases have led to indictments, with 80 individuals receiving sentences of 36 months on average.

The IRS’s efforts concerning nonfilers comes as more criminal investigations were opened by the IRS in fiscal 2020, but indictments have continued to fall in recent years, Bloomberg reported. In fiscal 2020, 2,596 criminal probes were launched, the first increase after six years of declining numbers.

Naomi Jagoda contributed.