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IRS Begins Crackdown on Millionaires Who Don’t File

By Yuval Rosenberg and Michael Rainey
Friday, March 1, 2024

Happy Friday and welcome to March! It’s going to be a busy month.

IRS Begins Crackdown on Millionaires Who Don’t File

The IRS is cracking down on thousands of high-income earners who haven’t filed tax forms in years, an effort that could yield hundreds of millions of dollars in unpaid taxes.

The tax agency said Thursday that it is starting to send letters to 25,000 people who earned more than $1 million a year but didn’t pay taxes between 2017 and 2021. The IRS is targeting another 100,000 people who earned between $400,000 and $1 million and didn’t file taxes during the same period.

The initiative is made possible by the additional funding the IRS received through the Inflation Reduction Act, the agency said in a statement. Through third-party sources such as 1099 forms, the agency has long been aware of high earners who had failed to file their taxes, but in recent years the IRS has lacked the resources to pursue them.

“Without adequate resources, the IRS non-filer program has only run sporadically since 2016 due to severe budget and staff limitations that didn’t allow these cases to be worked,” the agency said. “With new Inflation Reduction Act funding available, the IRS now has the capacity to do this core tax administration work.”

The third-party resources the IRS is relying on indicate that the economic activity involved exceeds $100 billion, which could generate hundreds of millions of dollars in payments if and when the cases are cleared up.

“If someone hasn’t filed a tax return for previous years, this is the time to review their situation and make it right,” said IRS Commissioner Danny Werfel. “For those who owe, the risk will just grow over time as will the potential for penalties and interest. These non-filers should review information on IRS.gov that can help and consider talking to a trusted tax professional as soon as possible.”

Shutdown Averted for Now, but This Month Could Still Get Messy

Government agencies won’t be shutting down tonight now that President Joe Biden signed into law the stopgap government funding measure Congress passed yesterday. The new law extends federal funding in two stages, with some agencies funded through March 8 and the rest through March 22.

The House passed the stopgap in a 320-99 vote Thursday and the Senate followed suit last night, approving the bill by a 77-13 margin. This is the fourth short-term spending fix Congress has passed for the current fiscal year, which started in October.

With a shutdown averted for now, lawmakers will focus on the six-bill spending package they intend to pass next week. Text of the “minibus” package could be released this weekend, but it reportedly may also slip to Monday.

Conservatives are still grumbling about the lack of Republican policy victories in the spending package and the process that they say routinely results in appropriations being decided by leadership staffers behind closed doors.

“Whoever’s in charge of the Senate and whoever’s in charge of the House, they put their staff in a room and they come up with something and tell you to take it or leave it,” Republican Rep. Thomas Massie of Kentucky said earlier this week, per Politico. "This is exactly what we said we would not do at the beginning of this Congress. This is the exact way it’s been done for the 12 years that I've been here and it’s wrong."

Those conservative complaints mean that Johnson will rely on Democrats to pass the spending package next week under suspension of the rules, a process that requires a two-thirds majority.

What’s next: Mercifully, the end of the fiscal year 2024 budget and appropriations process may be in sight, though there could still be bumps — big or small — in the days and weeks ahead.

Yet even as lawmakers avoid a shutdown and look to finalize the annual spending bills, they are leaving aside, at least for the moment, a supplemental spending bill containing aid for Ukraine that Biden and others insist is crucial — for U.S. interests as well as Ukraine and Europe.

House Speaker Mike Johnson said again this week that U.S. border security must be addressed first. Johnson has helped kill a Senate border compromise and blocked action on Ukraine, channeling isolationist hostility to aiding Ukraine from many of his members — and vocal opposition to border legislation from former president Donald Trump, who wants to preserve the migrant crisis as a campaign issue in his race to retake the White House. While Johnson has expressed support for Ukraine, it’s unclear whether or when he might take up an aid bill.

The bottom line: This Congress still has plenty of work left to do.

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