IRS Targets Delinquent Taxpayers

NEW YORK (MainStreet) — With the U.S. economy still ailing and national debt approaching $14.9 trillion, the federal government is under the gun to make financial ends meet. One area the government is stepping up efforts to generate more cash flow is through the collection of delinquent federal taxes.

By and large, the Internal Revenue Service estimates that 21% of federal individual taxes are not paid every year, and that number amounted to roughly $300 billion in 2008, and the government says it files about 600,000 tax liens annually to collect some of that.

But what if the federal government knew specifically where to look for the most popular places where tax delinquents reside? Well, now they can.

A study by TaxLifeboat, a Scotts Valley, Calif.-based tax advisory service, says that New York City is “far and away” the home to the most tax delinquents in the U.S. The company studied tax liens in the top 50 ZIP codes in the U.S. over the past year and concludes that New York City comprises 18% of the  liens recorded in major metropolitan U.S. areas.

The New York City ZIP codes that stood at the top of that list are some of the priciest in the U.S., including the Upper West Side and Chelsea. TaxLifeboat reports that tax debtors in those areas earn an annual income that is, on average, 250% higher than those residents in New York City’s “less affluent  neighborhoods”.  The report also places the average IRS debt for “wealthier” Manhattan tax debtors at $58,592 – 86 times higher than other New Yorkers with tax problems.

“The statistics suggest a rather harsh reality,” explains Tom Evans, TaxLifeboat’s founder. “Some people in New York apparently choose not to pay their taxes, and some simply don’t have the means to do so.”

Ironically perhaps, not all – or even most – of the remaining ZIP codes ranked by the survey are high-income ones, suggesting that Manhattan may be an aberration. Las Vegas, Washington, D.C. and Detroit are all featured prominently in the tax delinquency rankings, but mostly in urban neighborhoods that are struggling economically.

The data doesn’t cast any blame on Americans who find themselves in arrears on their federal taxes. In fact, it goes out of its way to say that the stagnant economy has broken the fortunes of the wealthy, the middle class, and the poor alike (at least from a tax delinquency point of view).

The study does say that the IRS is more aggressive about tax collections in poorer communities, but that’s not deliberate. TaxLifeboat says that the disproportionate representation among less-affluent taxpayers “is the unintended consequence of the IRS’s increasingly automated, one-size-fits-all enforcement procedures.”

But as the government grows more vigilant about coming after Americans who are late paying their taxes, it doesn’t matter where you live.

If it is in New York City, though, the IRS just may have a spotlight on you.

Going after tax cheats is one way to enforce tax policy, but some politicians want to do it by changing the tax structure itself. Check out MainStreet's look at What the GOP Candidates Will do to Your Taxes!

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