The IRS has been expanding its use of data analytics to better target its enforcement efforts. It has identified that there are a significant number of “high income” taxpayers who have not been filing tax returns. It is believed that the lost tax revenue amounts to billions of dollars. Keep in mind that to be considered “high income” in the eyes of the IRS, the threshold is $100,000. The project was well underway at the beginning of 2020 when the pandemic closed everything down.
While the IRS was shut down along with everyone else, it put the time to good use. Despite being side tracked by the CARES Act, PPP loans and the Economic Impact Payments, it has significantly retooled. Previously, only a limited number of revenue agents were capable of working remotely. Currently, that has changed dramatically and more than 90% of revenue agents will be able to work remotely. The IRS has begun to reopen service centers and reengage in various enforcement programs that were underway.
The IRS has identified 879,415 taxpayers that fall into this category based on its research between 2014 and 2016, representing $45.7 billion dollars. Through the use of data analytics and utilizing information from its extensive data resources, including those related to crypto assets, and foreign assets reporting forms, it has identified taxpayers it wants to question further.
The intention is for the IRS to make direct contact with the relevant taxpayers, including visits where and when that is possible. The IRS agents intend to educate the taxpayers as to their responsibilities, among other things.
The IRS recommends that taxpayers who fall into this category should get ahead of their filing responsibilities before they are contacted under this initiative.
Taxpayers should of course be on the lookout for scams and know that despite the fact that the visits will be unannounced, IRS agents will have two forms of official identification and will educate the taxpayer on the issues and their options, and will not threaten them.