The Internal Revenue Service (IRS) issued a wake-up call to wealthy individuals and corporations with unreported or back taxes due in mid-April. They noted that it’s time to pay off the $1 trillion they owe. Otherwise, the federal tax authority is coming after them.
If you’re wondering where the $1 trillion tax debt came from, the IRS explained. They also highlighted why their target would soon be corporations and wealthy individuals to recover what the IRS believes taxpayers owe them.
How did the IRS come up with this $1 trillion tax deficit amount?
The IRS commissioner announced during a meeting with senators on April 13 that his agency discovered that taxpayers failed to pay $441 billion in annual taxes between 2011 and 2013. He noted that his agents successfully recovered $60 billion of that overall amount, leaving behind $381 billion in uncollected yearly revenue.
Tax authorities say that there are three income sources most apt to be unreported and thus untaxed. These include illegal and foreign source incomes and cryptocurrencies.
Why is the IRS planning to go after select individuals for unpaid taxes?
The IRS noted that they plan to direct their enforcement efforts at corporations and wealthy individuals. When asked why they plan to do so, the federal agency’s head noted that the top 1% of these entities owe most of the unpaid taxes. According to the IRS, 36% of them pay too little in taxes, resulting in a $175 billion loss. The IRS head notes that these entities may use offshore accounts and pass-through tax options to avoid detection.
How to address tax problems
One of the worst things you can do if you receive a letter from a tax authority letting you know of an impending audit is ignoring their correspondence. Tax problems won’t just go away. You’ll want to consult with an attorney to learn about your obligations and your rights.