The IRS is failing to collect billions in back taxes owed by super rich Americans

Janna Herron
·Editor
·2 mins read

The federal government is failing to go after rich Americans who’ve skipped paying their taxes for years, according to a new oversight report.

“In the past, the IRS has focused on the tax compliance of high-income individuals because their noncompliance can have a significant corrosive effect on tax administration,” the report from the Treasury Inspector General for Tax Administration stated. “Intentional non-filing of tax returns by those with significant financial resources and sophistication is a brazen form of noncompliance.”

Read more: Here’s why the IRS would want to audit your taxes

Almost 880,000 high-income Americans owe $45.7 billion in overdue taxes from 2014 to 2016, the report found. The top 100 high-income non-filers during that time had estimated tax due totaling $9.9 billion.

The Internal Revenue Service (IRS) didn’t investigate 42% of those cases, representing $20.8 billion in lost tax revenue, because of lack of oversight and dwindling resources.

High-income non-filers owe $45.7 billion in back taxes from 2014 to 2016, according to a report from the Treasury Inspector General for Tax Administration. (Screenshot from TIGTA report)
High-income non-filers owe $45.7 billion in back taxes from 2014 to 2016, according to a report from the Treasury Inspector General for Tax Administration. (Screenshot from TIGTA report)

Of the outstanding 879,415 high-income tax cases, the IRS never investigated 369,180 of them, according to the report. The IRS never placed 326,579 cases in line to be further investigated after non-filers ignored a second delinquency notice. Another 42,601 cases were closed out without ever being investigated.

Read more: Tax deadline postponed: Why you should still file as soon as you can

The remaining 510,235 cases, or an estimated $24.9 billion in taxes, are still waiting to be investigated but likely won’t because of a lack of resources at the agency, according to the report.

A woman enjoys a mint julep before the 142nd running of the Kentucky Derby at Churchill Downs in 2016. (Photo: Kramer Caswell/Louisville Courier-Journal via USA TODAY)
A woman enjoys a mint julep before the 142nd running of the Kentucky Derby at Churchill Downs in 2016. (Photo: Kramer Caswell/Louisville Courier-Journal via USA TODAY)

Additionally, the agency shelved 37,217 cases totaling $3.2 billion in estimated tax dollars. These will not likely be worked by the IRS, the report found.

Intentional failure to file federal tax returns is a crime and can also result in civil fraud penalties.

The non-filing of tax returns also makes up part of the tax gap, or the difference between the amount taxpayers are estimated to pay and the amount paid voluntarily on time. The report estimated that non-filers make up 9% of that gap.

Janna is an editor for Yahoo Money and Cashay. Follow her on Twitter @JannaHerron.

Read more:

Read more personal finance information, news, and tips on Cashay