There are apparently 125,000 people in the U.S. who are believed to make over $400,000 a year and have not filed taxes since 2017. How does the IRS let this go for so long? What do they do all day? ‘Many engaged in tax evasion’: A new IRS plan targets high-income Americans who haven’t done this 1 simple thing in recent years — here's what you need to know
It would seem an easy thing to send notices and follow up on those who have reported income but are not filing. It is possible that some of these are having taxes withheld but just aren’t filing.
Good news is Biden is calling for a 25% tax on billionaires. Problem is billionaires don’t have income. It would be a wealth tax which is unconstitutional. Maybe he should focus on having the IRS get the revenue from these non-filers instead.
Good luck with that. It’s an idea that is not enforceable in practice. The IRS can’t even catch people not filing for 5 years much less audit (annually) billionaires balance sheets. Warren has railed about a wealth tax for years. It’s a ridiculous notion purported by people who have no clue how it would be put into practice.
And yet, the IRS has a history of going after small businesses who haven't dodged taxes but just can't seem to figure out the process. In 2017, my wife's business had 4 redoes because the IRS didn't even know what she owed and she paid penalties for each of them and that's on top of having gone through 4 tax accounting firms. Instead of hiring a million people to go after Americans, why not spend the time and money and overhaul the tax code? They won't do it because they lack the balls to do it. Either are worried to much over donors or lobbying groups. Just like all the calls back in 2008 over term limits. None of us were fooled by the talk.
My experience with the IRS in several engagements therewith involving audits of fairly straightforward but mildly complex 1120s is the investigating agents and their supervisors are outgunned. The service’s financial and tax IQ is not what is needed to tackle any knowledgeable and well prepared taxpayer. Seems as though the service believes it will be successful in hiring liberal arts majors and training them to be capable agents. Unfortunately for the service, these folks have little business acumen and no real world experience.
They claimed we owed more than what we paid 2 years ago. Our tax guy said it was their mistake and had to file an appeal. Almost a year later they said our case hadn't been reviewed yet but we could just start paying anyway. We didn't. We ended up being correct and they owed us money but we had to pay the money to the tax accountant to figure out their mistake. The process is a complete joke and it only remains because the average citizen doesn't have representation to make changes happen.
I have a client who sent a check in years ago (before online payments). The check was for 250k and the IRS registered the payment as 2,500. It took almost 7 years to resolve. The IRS is an awful agency to deal with and most of the time you are forced to deal with them when it’s their error that caused the issue.
Why? Probably because people get big mad whenever someone proposes giving the IRS a bigger budget and hiring more people to go after tax cheats and just do enforcement in general.
The agency needs to be properly staffed. I've only dealt with them once, and it was a pretty easy fix to a complicated issue. That being said, I did my taxes yesterday and it is going to be a painful check I need to send. I under shot my tax estimate on some IRA conversions. Luckily, this is my last year filing where I have a W-2 and I will have much more control over my taxes going forward.
Or they simply choose to derive their income from capital gains since its favorably taxed, a matter of perspective. Its an easy fix, tax capital gains as income, problem solved. These are the same people who created this disparity in how income streams are taxed by creating "capital gains" as a distinct concept, by virtue of buying the people who legislate the tax code.
Cap gains are taxed at 0% for married filers up to 89k in income and 15% up to 554k (2024). If you want to make it income then you will increase taxes on all investors. Not as easy a fix as you think.
I can understand the concept of giving investors a lower tax rate on their earnings, because: 1) They are risking the loss of their money with their investment. People getting a paycheck are not risking the loss of that paycheck before it gets to the bank. and 2) They are providing a bit of a needed service to the economy by providing funds for businesses to invest as capital. Whether the current rates are optimal or not, I can't say. But I don't think we want to discourage people from investing in the stock market as a general rule.
The top 1% already pay 50% of the tax in this country. What’s the answer for the left? 75%, perhaps 100%?
