We all know that the Internal Revenue Service (IRS) won’t initiate taxpayer contact with a phone call. But a knock on the door? That’s precisely the plan as part of a new initiative: The IRS is stepping up efforts to visit high-income taxpayers who have failed to timely file one or more of their tax returns.
High-income may sound subjective, but the IRS does have a threshold. They are focusing on taxpayers who have generally received income over $100,000 during a tax year and did not file a tax return with the IRS.
According to the IRS, “[t]axpayers who exercise their best efforts in filing their tax returns and paying or entering into agreements to pay their taxes deserve to know that the IRS is aggressively pursuing others who have failed to satisfy their filing and payment obligations.”
Paul Mamo, Director of Collection Operations, IRS Small Business/Self Employed (SB/SE) Division, emphasized that “The IRS is committed to fairness in the tax system, and we want to remind people across all income categories that they need to file their taxes. These visits focusing on high-income taxpayers will be taking place across the country. We want to ensure taxpayers know their options to get right with their taxes and avoid bigger issues later.”
But your chances of being pursued may vary according to your income level. Last year, according to the IRS 2018 Data Book, returns with adjusted gross income (AGI) of $10 million or more were audited at a rate of 6.66% – a considerable dip from 14.52% in 2017. Those high earners saw their audit rate drop the most. And audit rates declined for all income levels from $200,000 to $10 million. But the rate trended up from 0.48% to 0.54% for households reporting AGI of $50,000 to $75,000. The $100,000 mark feels like it might be a sweet spot for exams.
But the IRS notes that the visits shouldn’t catch taxpayers off-guard. According to Hank Kea, Director of Field Collection Operations, IRS SB/SE Division, “These visits shouldn’t come as a surprise to the taxpayer because the IRS has contacted these individuals multiple times regarding their tax issues prior to their cases being assigned to an IRS revenue officer.”
But that doesn’t mean you’ll know exactly when they’re coming: generally, these visits are unannounced because scheduling appointments for such matters would be inconsistent with their “proactive and urgent nature.” If a taxpayer hasn’t yet moved into compliance after receiving notices and bills, a visit could be the thing to convey how important the matter might be. The IRS anticipates that these visits will be instrumental in informing taxpayers of their tax filing and paying obligations and, hopefully, bring taxpayers into compliance. During the visits, IRS revenue officers will share information. They should also work to help resolve the tax issue.
Revenue officers are IRS employees who work cases involving missing tax returns or taxes owed. They may conduct interviews to gather information and advise about the necessary steps to become and remain compliant. When necessary, they will take the appropriate enforcement actions to collect the taxes owed.
Revenue Officers carry two forms of official identification, a pocket commission and an HSPD-12 card (a government-wide standard form of identification for federal employees). Both types of identification have serial numbers and photos, and you can ask to see both. The RO can also provide an additional method of verification.
The IRS plans to make about 800 in-person visits in the first two months of the program with more to follow through the year.
