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IRS has new strategy for collecting tax debt from nonfilers

The IRS loses billions of dollars every year in tax revenue from those who neglect to file tax returns. An audit was done by the Treasury Inspector General for Tax Administration (TIGTA) to determine if the IRS controls were effectively identifying and addressing expired tax filing extensions. The TIGTA found that while the IRS sends proper notification 640,000 nonfilers each year, they missed approximately 1.9 additional taxpayers in 2012 and 2013 combined. As of May of this year, the back taxes for these nonfiling taxpayers equaled $7.4 billion.

In some ways, it may seem like an impossible task to collect on these debts. According to the IRS, however, they plan to make changes in how they identify and deal with those who don't file.


In their final report, issued September 23, 2016, the TIGTA recommended that the IRS "change various collection function and information technology controls, tools, and procedures to improve the nonfiler program and ensure that additional nonfilers are addressed."

The IRS agreed with TIGTA's recommendations, and is planning to take corrective action. The organization had previously revised its nonfiler strategy and outlined goals to achieve compliance in February 2014, but initiatives were never properly implemented.

"We will investigate the options for improving the effectiveness of the delinquency notice to increase the number of nonfilers who are contacted and the nonfiler response rate," wrote Karen Schiller, commissioner of the IRS's Small Business/Self-Employed Division. "As part of that process, we will collaborate with our Information Technology function to expand its review of the inventory volume and document fluctuations in inventory counts for each tax year, ensuring that anomalies are addressed."

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