Close to 1,000 taxpayers who earn over $1 million a year failed to file tax returns over multiple recent years, potentially owing $34 billion in taxes, according to data from the Internal Revenue Service.
Senate Finance Committee chairman Ron Wyden, D-Oregon, revealed the data in a
According to IRS data, the top 500 high-income individuals who still have not filed returns for each year from 2017 to 2020 owed $923 million and yet were unlikely to face serious consequences. However, only two of those 2,000 individuals were under active criminal investigation by the IRS and only 58 have been subjected to financial penalties such as liens or levies.
The data showed that over 1.4 million wealthy tax cheats had still not filed required tax returns for tax years 2017 to 2020 and the total amount of unpaid taxes potentially owed by this population amounted to $65.7 billion.
"Many of these high-income nonfilers are repeat offenders," said Wyden. "According to IRS data, 10,272 taxpayers still had multiple years of unfiled returns and six figure balances of unpaid taxes going back to 2017–2020. In fact, nearly 1,000 taxpayers making more than $1 million per year have failed to file tax returns over multiple recent years."
Due to resource constraints and prosecutorial discretion, he noted most of the cases never get referred to the Department of Justice for criminal prosecution. Of the 10, 272 repeat offenders, only 154 have ever been under criminal investigation, and only 31 were in active criminal investigation this year.
Wyden pointed to the extraordinary amount of unpaid taxes owed by a small subset of ultrawealthy nonfilers, with the data showing that 8,729 high-income nonfilers for tax years 2017–2020 each had a potential balance of unpaid taxes of over $500,000.
He discussed the letter during a confirmation hearing Thursday for the nominee for IRS chief counsel, Marjorie Rollinson.
"What's really going on out there in the tax area reflects what I did today, releasing data that shows that there are thousands of millionaires who simply refuse to file or pay their taxes," said Wyden. "That's what the new money for the IRS has got to focus on. Just get your arms around that. That's not what people normally think, that the billionaire or the millionaire calls up their tax accountants and tries to work out some sort of way to not pay income or payroll taxes. We're talking about here: nonfiling. Thousands of millionaires in the data that I released today for just three years from the IRS basically gave a raspberry to the government and just said, 'We're not going to file, we're not going to pay,' and that's wrong. That's what we've got to focus on at the IRS."
Rollinson was asked by Wyden during the confirmation hearing about the prospects of a government shutdown and the impact on the IRS.
"I have been there for two government shutdowns in the past, and I will say that from the perspective of the Chief Counsel, it is concerning in terms of making sure that we're going to be staffed," she responded. "But your question about looking at it from the taxpayers is one that I've seen played out today in many of the news reports, people debating just just how big of an impact is it on people right away when the government shuts down, and I think that is something that needs to be considered very carefully from the perspective of the Office of Chief Counsel. It means making tough decisions about what work will get done while the government is shut down."
Wyden asked about choices that would have to be made in the IRS's work for seniors and veterans.
"Choices have to be made about what work can get done while the government is shut down and it can have an impact on ongoing litigation," said Rollinson. "It can have an impact on guidance to the field. It can have a very direct impact."
On Thursday, the American Institute of CPAs sent a
Rollinson recently retired from Ernst & Young as its national tax deputy leader and prior to that worked as associate chief counsel (international) and deputy associate chief counsel at the IRS after formerly working at EY as a principal in the firm's national tax department and national director of international tax services — technical, and co-chair of the firm's International Tax Technical Committee. She was asked by Sen. Elizabeth Warren, D-Massachusetts, about accusations of a revolving door at the IRS and the big accounting firms, something that was the subject of a recent report she requested from the Treasury Inspector General for Tax Administration (
"The IRS makes a lot of decisions that profoundly affect who actually pays to support our government," said Warren. "That's why I am very concerned about the revolving door, where large accounting firms and their lawyers into high-ranking positions at the IRS to create new tax loopholes for their clients, and then those firms reward those same lawyers with promotions and bigger paychecks when they leave government service and come back to the accounting firm. Ms. Rollinson, you have been through the revolving door more than once. You've gone from Ernst and Young to the IRS and then from the IRS back to Ernst and Young, and once again, from Ernst and Young back to the IRS, this time as Chief Counsel. I think that's a red flag. But you've made an unprecedented commitment as a nominee. Ms. Rollinson, you have sent me a letter committing, among other things, to recuse yourself from any matters related to former clients for your first four years at the agency, and for four years after you leave the IRS, not to go work for any company, including Ernst and Young, that has clients you interact with while you are at the IRS. This goes even further than President Biden's strong ethics requirements."
Sen. Mike Crapo, R-Idaho, the ranking Republican on the Senate Finance Committee, urged Rollinson to be careful about how the IRS interprets the Inflation Reduction Act.
"Interpreting the so-called Inflation Reduction Act is squarely within the IRS Chief Counsel's purview," he said. "The IRA created complexity that has proven unworkable in implementation, putting many American businesses and consumers at a significant disadvantage, and has supercharged IRS enforcement while short-changing taxpayer service. You will also have a significant role in addressing a number of other recent, concerning IRS actions, including: use of IRA funds to increase enforcement in areas with a long history of burdensome and low-utility 'no change' audits; leaks of confidential taxpayer information; the destruction of 30 million information returns, which reportedly led to additional audits of earned income tax credit claimants; and the ongoing attempt to stand up and divert resources to an IRS-run tax preparation program without clear statutory authority."
