Wealthy Americans continue to evade the IRS crackdown on non-filers

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Thousands of wealthy Americans are not complying with recent IRS efforts to get them to file tax returns, potentially due to the lesser consequences of not filing compared to filing false returns. The IRS has been contacting high income non-filers since early 2024, resulting in over $292 million in additional taxes collected from those who have filed. However, as of August, only a small percentage of the highest income non-filers had filed returns, and most have not faced legal consequences. The Treasury Department has proposed reclassifying certain non-filers’ offenses as felonies to increase federal revenues and deter tax evasion among high-income taxpayers. The department believes that increasing criminal penalties for wealthy individuals who fail to file tax returns would encourage compliance, close the tax gap, and ease the burden of financing the federal government on other taxpayers. The IRS and the Department of Justice have limited resources to investigate and prosecute non-filers, especially since resources are typically used for felonies. As a result, the likelihood of criminal investigation and prosecution for non-filers is low, and the agency aims to prioritize cases that have the highest deterrent effect.

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