Wealthy Taxpayers: Time to File Those Years-Late Returns

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Wealthy Taxpayers time to file those years-late returns

Are you a high-income earner who hasn’t filed your taxes in years? You might want to get your paperwork in order soon. The IRS is ramping up efforts to target wealthy individuals who haven’t been filing their returns, even if they haven’t yet received collection notices.

IRS’s Renewed Focus

Earlier this year, the IRS announced it would be pursuing wealthy taxpayers who have neglected to file their returns. This move is seen as the agency getting back on track after pandemic delays and years of underfunding. Consequently, tax professionals are seeing an uptick in inquiries from wealthy clients who, although not yet contacted by the IRS, want to preemptively file their returns.

Targeting High Earners

The IRS is initially focusing on 125,000 cases involving individuals with incomes over $400,000 who didn’t file returns between 2017 and 2021. The agency aims to recover hundreds of millions of dollars through these efforts. IRS Commissioner Danny Werfel confirmed in March that all relevant notices have been sent out.

Why File Now?

Most non-filers are not habitual evaders; often, a significant life event, like an illness, leads to falling behind on taxes. The recent IRS warning might be just the push needed for these individuals to catch up.

The 2022 tax-and-climate law, which provided the IRS with a significant funding boost, has strengthened the agency’s ability to enforce tax compliance. Voluntary compliance is usually more favorable for taxpayers rather than waiting for the IRS to pursue and enforce compliance.

Automated Notices Resume

In addition to targeting high-income non-filers, the IRS has resumed sending automated collection notices after a two-year pause due to the Covid-19 pandemic. These notices affect taxpayers of all income levels, including those who filed their taxes but didn’t pay their bill.

The Reality of Risk

Despite these efforts, some high-income non-filers might still ignore the IRS notices. The IRS’s campaign might face delays as it hires and trains new staff, but for some, the threat of enforcement alone isn’t enough to spur action.

How Tonneson + Co Can Help

At Tonneson + Co, we understand that high-net-worth individuals and families require bespoke strategies to protect and propel their wealth. Our High Net Worth Individual and Family Office practice goes beyond traditional wealth management — we aim to understand your financial objectives, values, and vision for the future. Whether your goal is to preserve your wealth, have a philanthropic impact, or create a legacy for the next generation, we’ll help turn your aspirations into results.

We offer a comprehensive range of services tailored to your needs:

  • Year-round tax planning and consulting
  • Income tax compliance
  • Wealth planning, including estate and gift tax and charitable giving
  • Family trusts
  • Retirement planning
  • Equity-based compensation and stock option planning
  • Representation before the IRS and state and local tax agencies
  • Due diligence and advice on financial transactions
  • International tax planning
  • Accounting and bookkeeping services

Our goal is to help you minimize liabilities, maximize growth, and safeguard your wealth for generations to come. We take pride in our long-term relationships, still working with many of the same families today that we partnered with 20, 30, or even 40 years ago.

Connect with our experts who specialize in High-Net-Worth Individual and Family Offices today to discover how we can craft a tailored strategy that aligns with your values and secures your legacy. Let us help you stay compliant and protect your wealth from the upcoming IRS crackdown.

Let's Talk

If you’re interested in working with Tonneson + Co, please reach out to us. We look forward to hearing from you!