IRS Targets Tax Evading Professionals

by Mike Godfrey, Tax-News.com, Washington

29 October 2001

Working in tandem with the Minnesota Revenue Department, the Internal Revenue Service recently launched a pilot scheme to track down professionals such as lawyers, real estate brokers, insurance agents, and accountants, who fail to pay federal income tax.

Matching information from the state licensing boards to federal tax returns, the IRS can see which professionals have annually renewed licenses to practice, but are delinquent with their taxes, and pockets of non-compliance can be pinpointed. Although it is estimated that the state of Minnesota has around 25,000 non-filers, the problem is widespread, and the IRS reportedly anticipates uncovering around 8.6 million non-filers on a nationwide level.

The first conviction recorded under the fledgling program was that of accountant Scott K. Bailey, who was forced earlier this month to repay over $40,000 in back taxes for the period 1996-1998, and now faces fines and a possible custodial sentence.

Both the state authorities and the IRS are hopeful that the scheme will take off nationwide, and are anxiously monitoring the progress of the Minnesota experiment. Speaking to the Star Tribune, however, local attorney Tom Heffelfinger, seemed in no doubt as to the fate of the project: 'This is an ongoing effort and there will be more,' he promised.

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