Greenberg Traurig Alert
IRS To Pursue Non-Filers
By Barbara T. Kaplan, Greenberg Traurig, New York
View or download the PDF version of this Alert here.
In an apparent effort to stem the tide of repeat failure-to-file offenders, the
Internal Revenue Service ("IRS") is planning a major new initiative focusing on
nonfilers. The initiative is to be headed by the assistant director of the Kansas City
According to reports in the tax press, there has been a recidivist rate of over 30
percent for nonfilers who previously took advantage of the 1992-1995 nonfiler initiative.
Therefore, the IRS is planning a large and sustained commitment of resources to the new
Details of the program have not been announced and it is unclear whether the IRS
intends to investigate and seek criminal prosecution of repeat nonfilers. Nor is it known
whether newly identified nonfilers will be allowed to file delinquent returns and pay the
tax due without fear of a criminal charge being pursued.
With the knowledge that a compliance initiative for nonfilers is imminent, now is a
good time to review whether you have been in full compliance with all tax filing
obligations. This includes personal and corporate income tax returns, employment tax
returns, excise tax returns and various information returns. Individuals and entities that
previously took advantage of the 1992-1995 nonfiler initiative and who have again become
delinquent need to proceed with particular caution and professional advice.
Another major initiative the IRS is planning is in the "fast-growing" area of
noncompliance by individuals and corporations in the use of trusts. The IRS is training
its staff in this area and plans in 2001 to begin matching tax returns with the Schedules
K-1 of partnerships and S corporations. The IRS is already matching estate and trust
returns. These matching efforts are sure to uncover nonfilers who previously went
undetected. The spillover from the trust initiative, therefore, can impact on nonfiler
detection by the IRS.
Considered and careful planning for nonfilers and repeat nonfilers can produce positive
results without fear of prosecution and incarceration or public disclosure.
© 1999 Greenberg Traurig
This GT ALERT is issued for informational purposes only and is not intended
to be construed or used as general legal advice. Greenberg Traurig attorneys provide
practical, result-oriented strategies and solutions tailored to meet our clients’
individual legal needs.