Wyden Releases Updated High-Income Nonfiling Stats From TIGTA

Wyden Statement on New Data on Wealthy Individuals Who Refuse to File Taxes

NOVEMBER 03, 2021

Washington, D.C. — Senate Finance Committee Chair Ron Wyden, D-Ore., today released the following statement on new data from the Treasury Inspector General for Tax Administration (TIGTA) on wealthy individuals who refuse to file taxes:

“New information provided by the Inspector General indicates the IRS continues to let wealthy tax cheats get away without paying taxes owed. Those who flout the law by refusing to even file tax returns have been allowed to get off scot-free.

“Commissioner Rettig assured me at a June hearing that every high-income individual from tax year 2016 forward was involved in compliance action with the IRS, but the data suggest that 117 wealthy non-filers from 2014 to 2016 who owe $5.2 billion still haven't been pursued by the IRS. No tax delinquency investigations, no criminal referrals, no tax liens — nothing.

“We need to get to the bottom of this and understand why there has been no enforcement in these cases. While teachers and firefighters pay their taxes with every paycheck, these wealthy tax cheats are seemingly above the law. It's especially important that we course correct now to ensure needed investments in IRS enforcement are put to the best use.”

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October 29, 2021

The Honorable Ron Wyden
Chairman
Committee on Finance
United States Senate
221 Dirksen Senate Office Building
Washington, DC 20510

Dear Senator Wyden:

This letter is in response to your staff's October 6, 2021, correspondence to the Treasury Inspector General for Tax Administration (TIGTA) requesting an update on statistics reported in TIGTA's May 2020 report titled High-Income Nonfilers Owing Billions of Dollars Are Not Being Worked by the Internal Revenue Service.¹ This document has not been through TIGTA's quality review process and is being provided for informational purposes only.

The results from our 2020 report showed that the top 100 high-income nonfilers for Tax Years (TY) 2014 through 2016 had total estimated tax due of approximately $9.9 billion, making up 22 percent of the $45.7 billion associated with the 879,415 high-income nonfilers identified in the report. Figure 1 shows the results from the report for the top 100 high-income nonfilers that had not been resolved by the Internal Revenue Service (IRS) for TYs 2014 through 2016, as of the beginning of July 2019. For the 300 high -income nonfilers, we identified 143 nonfilers, with estimated tax due of $5.8 billion that had not been worked (99 nonfiler cases had not been placed into a Taxpayer Delinquency Investigation (TDI) inventory to be selected for work and 44 cases have been closed out of TDI inventory without being worked). The remaining 157 high-income nonfilers for the three tax years, with estimated tax due of $4 billion, were in the Collection or Examination function inventory streams for possible further treatment. Specifically, 150 of these 157 high-income nonfilers were in the Collection function TDI inventory and the other seven were referred to the Examination function. TIGTA provided this listing of the top 100 high-income nonfilers for TYs 2014 through 2016 to the IRS on July 19, 2019.

Figure 1: Summary of the Top 100 High-Income Nonfilers Having an Estimated Tax Due and No Satisfied Filing Requirement as of the beginning of July 2019²

Tax Year	Cases in Inventory3	Cases Not Placed in TDI Inventory4	Cases Closed Out of TDI Inventory but Not Worked	Total Cases
2014
Number	*1*	*1*	36	100
Estimated Tax Due	$1.0 Billion	$7.5 Million	$1.6 Billion	$2.6 Billion
2015
Number	*1*	94	*1*	100
Estimated Tax Due	$62.5 Million	$3.6 Billion	$21.9 Million	$3.7 Billion
2016
Number	90	*1*	*1*	100
Estimated Tax Due	$2.9 Billion	$20.3 Million	$634.7 Million	$3.5 Billion
Total Cases	157	99	44	300
Total Estimated Tax Due	$4.0 Billion	$3.6 Billion	$2.2 Billion	$9.9 Billion
Source: TIGTA analysis of Individual Master File Case Creation Nonfiler Identification Process nonfiler data from the IRS's Compliance Data Warehouse and matched with tax account information from the Individual Master File records and additional tax account research.

The Committee requested updated information regarding how many taxpayers from this group of high-income nonfilers have been brought fully into compliance, how much tax liability remains uncollected, and any enforcement actions taken by the IRS to collect, including levies, Notices of Federal Tax Lien Filings, or seizures of property. In order to perform our analysis and respond quickly to the Committee's request, we conducted an analysis similar to that performed in the prior report and determined if the cases were still in an IRS inventory, not placed in TDI inventory, closed out of inventory, or if the case had been worked and brought into compliance.

As shown in Figure 2, we reevaluated the 300 top high-income nonfilers shown in our May 2020 report and identified 117 (39 percent) nonfilers, with an estimated tax due of more than $5.2 billion, that still have not been worked as of mid-October, 2021 (70 nonfiler cases had not been placed into a TDI inventory to be selected for work and 47 cases have been closed out of TDI inventory without being worked).⁵ A total of 78 (26 percent) of the top high-income nonfilers for the three tax years are either in the Collection function's TDI inventory, being worked by the Criminal Investigation function, or being worked by or referred to the Examination function, with estimated tax due of $2.8 billion. The remaining 105 (35 percent) cases have been worked by the IRS or the taxpayer has filed a return.

Figure 2: Summary of the Top 100 High-Income Nonfilers as of mid-October, 2021⁶

Tax Year	Cases in Inventory7	Cases Not Placed in TDI Inventory8	Closed Out of TDI Inventory but Not Worked9	Cases Worked ot Taxpayer Filed Return	Total Cases
2014
Number	*1*	*1*	33	46	100
Estimated Tax Due	$131.4 Million	$2.4 Million	$1.6 Billion	$945.5 Million	$2.6 Billion
2015
Number	*1*	66	*1*	23	100
Estimated Tax Due	$545.4 Million	$2.9 Billion	$0	$242.8 Million	$3.7 Billion
2016
Number	47	*1*	*1*	36	100
Estimated Tax Due	$2.1 Billion	$20.3 Million	$779.6 Million	$632.2 Million	$3.5 Billion
Total Cases	78	70	47	105	300
Total Estimated Tax Due	$2.8 Billion	2.9 Billion	$2.3 Billion	$1.8 Billion	$9.9 Billion
Source: TIGTA analysis of the 300 tax accounts using information from the Individual Master File records and additional tax account research.

As shown in Figure 3, out of the 105 cases worked by the IRS (including cases where taxpayers filed their tax return without IRS enforcement actions), in 42 cases (40 percent) taxpayers paid all tax liability and are fully compliant, resulting in $92.9 million in taxes assessed and paid. The IRS assessed tax for 27 (26 percent) cases and either the account has been partially paid or no payments have been made at the time of our analysis, resulting in assessed taxes of $61 million and a remaining balance due of $99.4 million, which includes assessed taxes, interest, and penalties. The remaining 36 (34 percent) cases have been worked by the IRS and no longer have a tax liability.

Figure 3: Summary of the High-Income Nonfilers Worked by the IRS or With a Taxpayer-Filed Return as of mid-October, 2021¹⁰

Tax Year	Cases Where Taxpayer is Fully Compliant (Paid)	Cases With Assessed Tax (Not Paid or Partially Paid)11	Satisfied Account12	Total Cases Worked or Taxpayer Filed Return
2014
Number	14	9	23	46
Tax Assessed	$3.2 Million	$40.6 Million	$0	$43.8 Million
Balance Due	$0	$70.0 Million	$0	$70.0 Million
2015
Number	8	10	5	23
Tax Assessed	$12.9 Million	$3.6 Million	$0	$16.5 Million
Balance Due	$0	$893,090	$0	$893,090
2016
Number	20	8	8	36
Tax Assessed	$76.7 Million	$16.8 Million	$0	$93.5 Million
Balance Due	($41,599)	$28.5 Million	$0	$28.5 Million
Total Cases	42	27	36	105
Total Tax Assessed	$92.9 Million	$61.0 Million	$0	$153.9 Million
Total Balance Due	($41,599)	$99.4 Million	$0	$99.4 Million
Source: TIGTA analysis of the 300 tax accounts using information from the Individual Master File records and additional tax account research.

If you have any questions or require further information regarding this matter, please do not hesitate to call me at (202) 622-6500, or have a member of your staff contact Michael McKenney, Deputy Inspector General of Audit, at (202) 622-5916.

Sincerely,

J. Russell George
Inspector General