Menu
Tax Notes logo

Delinquent High Earners in IRS Crosshairs for 2020

Posted on Dec. 16, 2019

An IRS program called “Hi-Def” will soon confront head-on any perception that the agency isn’t pursuing tax-delinquent rich people.

Darren J. Guillot, deputy commissioner for collection and operations support in the IRS Small Business/Self-Employed Division, told the American Bar Association National Institutes on Criminal Tax Fraud and Tax Controversy in Las Vegas that the agency will start contacting taxpayers for its high-income delinquent filer program starting in the first quarter of 2020.

“I’ve got the maps, and I know where they are. I know where they live. I know exact numbers by states,” Guillot said December 12. “So we are coming, and we are going to be asking them why they haven’t filed returns.”

The IRS will also seek revenue through better communication, releasing early next year two taxpayer notices revised under the plain-language mandate in the Taxpayer First Act (TFA, P. L. 116-25) that showed “significant improvements in revenue” during preliminary testing with taxpayers, Guillot said. He did not specify which notices.

Hi-Def and the revised notices are examples of new initiatives the IRS has undertaken to make the tax agency’s programs both more effective and customer-friendly, Guillot said. “Even I’ve picked up IRS publications over the past 10 years or so and have to read them two or three times, [asking] ‘What does that mean?’ And I work there.”

“Taking appropriate enforcement action every time that’s appropriate — that’s an important word,” Guillot said. “The Taxpayer First Act really invites the IRS to reinvent itself as much as necessary in a way that better serves taxpayers, and so that’s what we’re trying to do here.”

Remember Taxpayer Rights

But former National Taxpayer Advocate Nina Olson said the IRS is skipping a crucial step in its notice revisions.

“They talk about behavioral modification, and they do not first do the work to understand why taxpayers comply or don’t comply,” Olson said. “They’re trying to drive taxpayer behavior, and the behavior that they’re trying to drive is increasing revenue.”

The IRS’s new revised collection due process notices aren’t “rights-based notices, they are notices to drive revenue, instead of informing the taxpayer that the collection due process right is one of the most significant rights that taxpayers have in our system,” Olson said.

Olson recalled that the Taxpayer Advocate Service once reviewed notices the IRS designed to persuade delinquent taxpayers to pay more and pay upfront. A sizable number of taxpayers agreed to repayment despite having incomes below the allowable living expenses collection limit. Just 1 percent of eligible taxpayers request a CDP hearing, “because people don’t know what a CDP hearing gives you,” she said.

TAS research also found that collection revenue — typically 1.4 to 1.5 percent of the roughly $3 trillion a year tallied by the IRS — varies little, regardless of whether liens and levies rise or fall, Olson said.

“A [redesigned] notice needs to be a rights-based notice that wants to educate taxpayers about their rights,” Olson said. Such notices would produce an uptick in requests for CDP hearings, which would be one way to know the revised notices were fulfilling their TFA mandate not just to produce more revenue but to serve taxpayers, she said.

Olson offered one more way the IRS could fulfill its TFA-expanded taxpayer service mandate.

“Revenue officers are very important; revenue agents are very important,” Olson said. “But protection of taxpayer rights, taxpayer service, taxpayer education — the Taxpayer Advocate Service is very important. And as you ramp up liens and levies, you’d better ramp up [the] Taxpayer Advocate Service.”

TAS had about 2,100 employees when Olson started as national taxpayer advocate in 2002, but just 1,600 when she left this year, she said. “I don’t hear the commissioner talking about increased hiring of Taxpayer Advocate Service employees as he’s talking about more revenue officers and more revenue agents,” she added.

Copy RID