The IRS is using state professional licensing agencies to help identify taxpayers who have current licenses and are therefore probably working and earning a living. Matching names with IRS computer records to determine if these professionals are filing tax returns, the IRS hopes to zero in on millions of tax evaders.
Working with the Minnesota Revenue Department, the IRS has begin matching W-2 information and data from 1099 and 1098 forms with names of professionals with active state licenses, including lawyers, real estate brokers, accountants, insurance agents, and others.
The first conviction as a result of this program was recorded last week in Minnesota. Minnesota accountant Scott K. Bailey pled guilty to a federal misdemeanor charge of failing to pay federal income taxes. Mr. Bailey reimbursed the government for nearly $40,000 in back taxes from 1996-1998 and faces a potential fine in the range of $3,000 to $30,000 as well as up to six months in prison.
The IRS has determined that Minnesota has more than 25,000 non-filers, about 1,500 of whom are self-employed. Overall, the IRS anticipates unearthing about 8.6 million non-filers nationwide as a result of this program.