IRS Initiates Crackdown on Unpaid Gambling Taxes Following Audit Findings
In a recent move, the Internal Revenue Service (IRS) is gearing up for a significant enforcement initiative targeting unpaid taxes related to gambling winnings. This decision comes after a critical audit conducted by the Treasury Inspector General for Tax Administration (TIGTA), which uncovered that approximately $1.4 billion in taxes from gambling winnings remains uncollected.
The TIGTA audit, released on September 30, highlighted a troubling trend: nearly 150,000 individuals in the United States who reported gambling winnings exceeding $15,000 between 2018 and 2020 failed to file their tax returns. The report noted a staggering total of more than $13.2 billion in gambling winnings during this period, emphasizing the potential for the IRS to recover significant revenue by addressing the non-filers.
According to the audit, tax enforcement measures concerning non-filers with gambling winnings have been alarmingly lax. It was revealed that over 103,000 individuals among this group have not received any notices or faced enforcement actions aimed at bringing them into compliance. In light of these findings, TIGTA urged the IRS to initiate appropriate enforcement actions to collect the outstanding taxes.
In response to the audit, the IRS acknowledged the recommendations made by TIGTA and has pledged to enhance its enforcement activities. Lia Colbert, commissioner of the IRS’s Small Business/Self-Employed Division, confirmed the agency's commitment to identifying high-income non-filers with gambling winnings who have yet to face any enforcement actions. This includes targeting the top 100 non-filer cases identified in the TIGTA report.
The IRS's renewed focus on this issue signals a broader effort to ensure compliance and bolster tax revenue from often-overlooked sources. As the agency gears up for its crackdown, those who may be impacted are urged to review their tax filings to avoid potential penalties.
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