New Delhi

The Internal Revenue Service (IRS) has set its sights on high-income earners who have neglected to file tax returns, with a targeted approach aimed at 125,000 cases since 2017.

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This is based on a Reuters report.

Following a revival of the non-filer enforcement program, previously hampered by budget cuts, the IRS is utilising the $80 billion in funding from the 2022 Inflation Reduction Act to resume mailing non-filing notices.

This initiative includes individuals with an apparent annual income exceeding $1 million, accounting for 25,000 cases, and an additional 100,000 returns indicating income between $400,000 and $1 million.

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According to IRS Commissioner Danny Werfel, the total "financial activity" linked to the unfiled returns surpasses $100 billion, with potential unpaid tax liabilities reaching into the hundreds of millions.

The Inflation Reduction Act resources have empowered the agency to fulfil its core responsibility of ensuring fairness for all taxpayers who adhere to the rules.

The IRS plans to send notices to non-filers with apparent income below $400,000, highlighting support to help them file taxes and leverage eligible tax breaks such as the Child Tax Credit and the Earned Income Tax Credit for low-wage earners.

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The non-filer enforcement program, dormant since 2016 due to staff reductions driven by budget cuts, has been revitalised with the hiring of up to 7,000 new customer service staff, account managers, and collections staff.

The infusion of funds and new automation technology, facilitated by the IRA funding, allows the IRS to pursue high-income non-filers more effectively.

The agency plans to send out 20,000 to 40,000 notices each week, demonstrating tangible results as it seeks to justify the supplemental $80 billion, which is continually under scrutiny from Republicans in Congress.

The IRS, currently executing this year's tax filing season, is keen on showcasing positive outcomes from the additional funding.

With taxpayer phone waits decreasing and collections totalling nearly $500 million from 1,600 non-filing "millionaires," the agency is underlining the impact of its efforts.

A recent Congressional Budget Office report warns that rescinding $20 billion of the Inflation Reduction Act funds would result in a reduction of federal revenues by $44 billion over 10 years, potentially adding $24 billion to the US budget deficit over the period.

(With inputs from Reuters)