The head of the Internal Revenue Service (IRS) issued a stern warning to corporations and individuals of means last week. He noted that they better either pay up the $1 trillion in taxes he alleges that they owe or otherwise prepare themselves to face the consequences.
Many political analysts point to President Joseph Biden’s need to find the funds to cover social programs and his other agenda objectives for the uptick in efforts to round up delinquent taxpayers.
How much and which types of taxes often go unpaid?
The IRS commissioner met with senators on April 13. He outlined how the decrease in the federal agency’s staffing and funding has resulted in the government not collecting as much as $1 trillion in taxes annually.
He chronicled how the IRS discovered that taxpayers failed to pay as much as $441 billion in annual taxes between 2011 and 2013. He noted that his agency only recovered $60 billion through enforcement efforts. He pointed out that still leaves a staggering $381 billion in lost revenue each year. The IRS commissioner highlighted how missing revenue sources, including:
- Foreign source incomes
- Cryptocurrencies
- Illegal source incomes
When asked by the senators why the IRS wants additional support necessary to step up its enforcement among corporations and wealthier taxpayers, the commissioner noted that it’s because the top 1% of these owe the bulk of the unpaid tax revenues. He said that at least 36% of these individuals fail to pay adequate taxes, resulting in a $175 billion loss in revenue. He noted that the federal agency’s existing auditing strategies don’t often catch the sophisticated approaches these wealthier individuals or companies use to avoid detection, such as pass-through businesses and offshore accounts.
What to know if you’re facing tax evasion allegations
If you file taxes, you’re well aware that the IRS recommends keeping your tax records around for a few years after the current filing year. They do this because it may take some time to perform audits. They want you to have all pertinent information for you to reference or review should questions arise.
An attorney can prepare you for what to expect as part of the audit process. Your lawyer can also advise you of your rights if the government accuses you of tax evasion.