Tens of thousands of wealthy Americans are dodging taxes by not filing their returns, as a misdemeanor charge for not filing is less severe than filing false returns. The IRS has started contacting high-income non-filers to urge them to file, but faces limitations in pursuing them due to budget constraints. The agency has seen some success in getting wealthy non-filers to file returns and pay taxes, but many still refuse to comply. Only a fraction of the wealthy non-filers who received warning notices have filed returns, and very few have faced legal consequences. The IRS has limited resources to pursue misdemeanor violations, which is why wealthy non-filers may be avoiding prosecution. A proposal by the Treasury Department suggests reclassifying misdemeanor non-filing offenses as felonies to increase criminal penalties for chronic non-filers. Increasing penalties for wealthy non-filers would deter tax evasion, encourage compliance, and help close the tax gap caused by those who do not pay their fair share of taxes.
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Rich Americans continue to evade the IRS crackdown on non-filers
