Tens of thousands of wealthy Americans are dodging an IRS crackdown on tax non-filers, taking advantage of a loophole in federal tax law. While filing false returns is a felony, simply not filing is only a misdemeanor, making it less likely for these individuals to face prosecution due to limited IRS and Justice Department resources.
The IRS launched a 2024 initiative to contact “high-income non-filers” who failed to submit returns since 2017 despite earning over $400,000. So far, 26,000 have complied, generating $292 million in taxes. However, fewer than 5,500 of the wealthiest non-filers, those with incomes over $1 million, have submitted returns.
Treasury officials propose reclassifying chronic non-filing as a felony to increase deterrence. With some non-filers earning over $5 million annually, enforcing stricter penalties could close the tax gap and ease the burden on compliant taxpayers.
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