Tax evasion has been a prevalent problem for the Internal Revenue Service, leading to limited revenue collection in the United States. As a result, the IRS has resulted in aggressive tax collection measures to ensure maximum tax compliance among all high-value businesses and top earners. High-value companies and top earners have significant financial power, making them ideal targets for government revenue through taxation in Washington DC and other states.
Tax evasions are illegal in Washington DC. It makes an individual or a company prone to tough penalties. A company or top earner is also prone to legal consequences such as asset liquidation and bank accounts freezing as the IRS recovers unpaid taxes.
The United States’ $1.85 trillion social policy and climate spending depend on the IRS’s revenue collection in all states. Unfortunately, limited government revenue collection makes it hard for the government to meet its primary budget.
Other aggressive IRS tax collection measures
Top earners risk losing various privileges because of being tax delinquent. The Department of State (DOS) was authorized to revoke passports of certified taxpayers with gross delinquent tax debts. The order was effected on July 15, 2021. Certified taxpayers with outstanding tax debts of more than $200,000 that date back to more than six years will not renew their passports before settling their tax debts. The IRS will prioritize such tax evaders in its aggressive tax collection methods, especially if they have never attempted to pay their tax debts with the IRS.
The COVID 19 pandemic affected many businesses negatively, making it hard to meet their operational costs. The IRS suspended most of its compliance operations to offer pandemic relief as per the People First Initiative. However, the government has made significant steps in containing the COVID 19 pandemic, allowing for full-scale economic recovery. Some tax evaders are still non-compliant despite having the financial ability to pay taxes. They are likely to suffer the IRS’s aggressive collection measures unless they can prove an inability to pay.
Compromises on IRS aggressive tax collection
The IRS has resumed its normal tax collection processes to uphold the national tax system’s integrity. Tax evaders will have to prove their inability to pay their tax debts. The Offer-in-Compromise will apply when a top earner or high-value business proves they cannot settle their tax burden in full due to their poor financial status.
Exceptions
The IRS is only permitted to collect unpaid taxes within ten years from the assessment date as per the 10-year statute of limitations. The IRS is barred from any aggressive collection after the ten-year period elapses.
The IRS applies aggressive tax collection practices on tax evaders as the Collection Statute Expiration Date nears. Essentially, a tax evader might lose a lot in the long term as their tax debts will have accumulated substantially. Moreover, any attempts to delay aggressive tax collection procedures might fail if investigations show they deliberately failed to meet their tax obligations.