September 30, 1992
IRS Reaches Out to Bring Nonfilers
Back Into the Tax System
If you haven't filed a Federal tax return for a couple of
years, you probably think the IRS is the last place you want to go,
The IRS wants you back in the tax system and has special plans
to help you help yourself. The IRS is reaching out to as many as
ten million individuals and business taxpayers who have not filed
tax returns and is inviting them back into the system. The IRS is
taking a comprehensive approach to solving the nonfiler problem,
offering specialized assistance and education to those who want to
get right with their government. The IRS will also employ
traditional enforcement steps for those who refuse to comply with
The problem of nonfiling is costly to everyone. The IRS
estimates that more than $7 billion in tax revenue is lost annually
due to nonfiling. And the cost to the nonfiler is more than they
may think. Interest and penalties continue to accrue on amounts
they may owe, and many nonfilers could be due refunds.
"We recognize that taxpayers may have run into problems that
caused them to drop out of the tax system," said IRS Commissioner
Shirley D. Peterson. "We are gearing our education and assistance
efforts towards helping them return to compliance. We believe that
the vast majority of this country's citizens wants to comply with
the law. Our goal is to help them and, ultimately to improve
compliance for the long term.
"We also realize that, in some cases, enforcement will be
necessary to gain compliance," she continued, "and we are ready to
handle these situations, too. We will focus our enforcement
resources on those taxpayers who willfully, repeatedly refuse to
comply with the law.
"It is never too late to get right with your government,"
Commissioner Peterson emphasized. "The time to do so is now, not
because this is a limited time offer but because we are offering to
help people put this problem behind them so they can get on with
Peterson said that the goal of the IRS' efforts goes beyond
just collecting delinquent returns. "We want to improve tax
compliance across the board and the best way to start is to get
everyone who is required to file a return to do so. This approach--
combining assistance and education efforts with direct enforcement--
marks a new way of doing business at the IRS," she concluded.
IRS research indicates that many people fail to file because
of a personal problem, such as a divorce or death in the family, or
a business reversal. In a pilot test of the nonfiler program, the
IRS found that more than 60 percent of nonfilers were self-employed
people who dealt in cash or were wage earners who had little tax
withheld from their wages.
The IRS also finds that after not filing for one year, the
nonfilers' problem compounds because fear of detection or the
inability to pay causes nonfiling to continue. To allay these
concerns, the IRS intends to review the facts in each nonfiler case
to determine if the taxpayer is entitled to a waiver from penalties
for failure to file and pay on time.
Also the IRS will work with taxpayers to set up installment
payment schedules when the situation warrants. IRS policies for
installment agreements and other collection procedures, such as
offers in compromise of the tax debt, were recently reviewed and
streamlined. These procedures will provide viable alternatives to
resolve nonfiler's delinquent accounts if the taxpayer cannot pay in
Failing to file a return can cost taxpayers in other ways.
they could lose out on some refunds. The IRs points out that
refunds must be claimed within three years from he time the return
was due or the refund is lost. Also, many of those taxpayers who
are self-employed don't realize that the failure to file and pay
self-employment tax could cause them to be ineligible for Social
Security retirement or disability benefits.
Over the past few months the IRS has made preparation to offer
assistance tailored to problems encountered by nonfilers. Local IRS
offices have copies of prior year tax returns and IRS employees have
been trained to help taxpayers reconstruct old records, such as
income statements, needed to prepare the old returns. Working with
local tax practitioner organizations and other volunteers, the IRS
is offering assistance at convenient community locations.
The IRS also has reviewed its records to identify nonfilers and
is reassigning 2000 examining agents-- around 10 percent of the
examination staff-- to begin contacting them.
While the IRS stressed that this new approach to dealing with
nonfilers is not a blanket exoneration, taxpayers who come forward
voluntarily to file their delinquent returns should not fear
criminal prosecution. "The IRS will not recommend criminal
prosecution of any taxpayer who comes forward, makes a true
voluntary disclosure, and files an accurate tax return,"
Commissioner Peterson said. "We want to encourage people to come
forward voluntarily and get right with the government."
Additional information concerning assistance for nonfilers can
be obtained by calling the IRS at 1-800-829-1040.
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