Some Nonfilers Paying Ultimate Price

WASHINGTON - Time has run out for dozens of individuals across the country who failed to file Federal income tax returns. Now they face criminal charges and possible jail time.

"This week millions of Americans are rushing to meet their tax obligations," said acting IRS Commissioner Michael P. Dolan. "It's just fair to make sure people who try to dodge their duty don't get away with it. Unfortunately some people learn the hard way," he added, "and that's the reason for our emphasis on aggressive criminal investigation of those who don't come forward."

Six months ago, the IRS began a three-pronged effort to bring nonfilers back into the tax system -- outreach and assistance, stepped up audits of apparent nonfilers, and pursuing criminal investigation of tax law violations involving nonfilers.

Since October of last year, the Internal Revenue Service has begun more than 200 criminal investigations of nonfiling that could result in prosecution. According to the Department of Justice, more than 100 individuals have been charged with failing to file their income tax returns between November 1, 1992 and April 1, 1993.

Nonfilers include persons from every walk of life and from every part of the country. Examples of some recent court cases include:

• A self-employed couple from the Northwest, convicted of willfully failing to file returns for a seven year period in which they earned a combined gross income of more than $11 million, were sentenced and fined.

• a Mid-Atlantic area self-employed accountant who also prepared tax returns is charged with failing to file his personal tax returns for three years on income of more than $514,000;

• a New Jersey laborer failed to file returns for three years in which he had taxable income averaging almost $34,000 per year. He had given his employer fraudulent withholding forms indicating he was exempt from tax.

• attorneys in the Midwest and Northeast who are charged with not filing when each had annual income in excess of $100,000;

• a man from the Southwest who allegedly received over $200,000 in self employment income during a two year period;

• a man from Southeast who is charged with not filing returns when he received income of more than $635,000 between 1986 and 1988.

"These criminal prosecutions show the serious consequences of flouting the law. When individuals fail to file their tax returns, they are cheating the government and the millions of Americans who voluntarily file returns and pay their taxes, " said Dolan.

The IRS reiterated that its long standing practice is not to recommend criminal prosecution of individuals for failing to file tax returns provided voluntarily file before being notified they are under criminal investigation. The taxpayer must make an honest effort to file a correct tax return and have income only from legal sources.

According to current IRS estimates, there may be as many as 10 million nonfilers nationwide costing the government $7 billion annually in lost tax revenue.

For taxpayers who want to get back into the system, the IRS has offered special assistance, including copies of old tax forms and help in getting records of income. In many cities throughout the country, IRS assistors and other tax professionals provide help in completing tax forms.

This assistance is helping many nonfilers get back into the system. Since the IRS initiative on nonfilers began last October, more than 155,000 people have called the IRS about filing prior year forms and another 58,000 individuals visited IRS offices to get information and assistance with their returns. From October until the end of January 1993, the IRS processed more than 4 million late filed returns from businesses and individuals. In January alone, the number of late filed Forms 1040 was up by 13 percent over January of 1992.

"We are encouraged by the response we have gotten so far but we know that the nonfiler problem won't be solved overnight," said Dolan. "The IRS is committed to improving tax compliance for the long term and we want to bring nonfilers back into the system to stay."

Many nonfilers fear the tax bills they'll face when they file their overdue returns. The IRS has promised to work with these taxpayers to resolve collection problems, possibly setting an installment payment schedules.

The IRS has also reviewed its records to identify nonfilers. Approximately 10 percent of the examination staff -- 2,000 examining agents worldwide -- have been reassigned to contact these individuals to obtain prior year returns.

The IRS cautions that nonfilers should not let another filing season go by without getting right with their government. For those who owe money, interest and penalties continue to mount until the return is filed and taxes are paid. Nonfiling can even be costly for those taxpayers due refunds. Nearly 45 percent of those late filers who have sent returns received refunds. The IRS reminds late filers that refunds must be claimed within three years of the original due date. That means refunds for 1989 must be claimed by April 15, 1993.

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