How Does the IRS Target Non-Filers?

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Currently, there are more than 10 million taxpayers who haven’t filed their tax returns (known as non-filers) in the United States. Thanks to a budget increase, the IRS is steadily ramping up its enforcement of the collection process targeting non-filers. The agency newly hired 10,000 agents last year and is planning to hire another 5,000 this year.


With its larger staff, the IRS planned to significantly increase in-person visits to notify non-filers of their obligations and to promote compliance. Although the emergence of COVID-19 put a halt to most collection activities, including planned visits, the IRS has resumed its focus on non-filers since the tax due date.


In spite of the pandemic, the IRS has continuously investigated people who haven’t filed tax returns in order to increase compliance and enforce the law. Pursuing non-filers is one of the IRS’s most efficient enforcement strategies because issuing non-filer notices can be a cost-effective tool that requires little more than automated notices.


So how does the IRS go about finding non-filers? Currently, it uses various new technologies, including new research, data analytics, and compliance strategies to improve or replace existing systems. It employs technologically advanced tools, referred to as taxpayer noncompliance indicators, and assembles the data into graphs to visualize and understand the relationship between tax entities, including businesses, individuals, tax return preparers, and more. These tools aid in efficiently pinpointing indicators of taxpayer noncompliance and investigating non-filers.


Recently, the IRS implemented some major new programs. First, the Automated Substitute for Return Program (ASFR) allows the government agency to notify individual taxpayers of a potential liability they might be responsible for, where the liability amount is calculated based on their income statement information. Second, the Automated 6020(b) process identifies business taxpayers with employed tax requirements that have unfiled tax returns for a specific period. Third, the Delinquent Return Refund Hold program (DRRH) allows the IRS to hold back individual taxpayers’ income tax returns if the taxpayers have unfiled tax returns within five years. These programs allow the IRS to rapidly increase identification and case creation of individual or business non-filers and ultimately encourage non-filers to reach compliance on their own.


Despite the advanced courses of action that the IRS has taken to track and investigate millions of non-filers, there is another reason for individuals to resolve their delinquent tax problems: The IRS actually owes refunds to numerous non-filers. More than 1 million households that haven’t filed tax returns in the last three years are eligible for refunds.


I encourage taxpayers to file delinquent tax returns as soon as possible. IRS agents are pursuing collection activities and investigating non-filers. 


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Comments (1)

Evelina Tsigelnitskaya
SIB Realty - Sunny Isles Beach, FL 305-931-6931

Great information. Thank you, James M. Cha, CPA, CTRS 

Sep 11, 2020 01:51 PM