The IRS is proposing that any person, who willfully fails to file tax returns in any three years with any five consecutive year period, and if the aggregated tax liability for the period is above $50,000, would be subject a new aggravated failure to file criminal penalty.  This proposal would classify such failure as a felony, upon conviction, impose a fine not more that $250,000 or imprisonment for not more than five years or both.  The fine for a corporation would be no more than $500,000.  This proposal would be effective for returns that are required to be filed on or after January 1, 2008.  This appears to have a limited chance of becoming law and is an example of how the IRS is looking for new tools to “encourage” non-filers to become compliant

The new Congress is looking to the IRS to collect more unpaid taxes and catch taxpayers who have underreported income to finance an ambitious spending agenda without raising taxes.  Congress believes IRS could collect up to $100 billion by collecting from self-employed taxpayers who are underreporting their income.  The target of the collection efforts will be focused on those individuals whose income isn’t reported through W-2’s or 1099’s.   The proposal would allow the IRS to obtain information about a business’s revenues from credit card companies.  If the income from credit cards were unusual or higher than reported, the IRS would then perform an audit.  The bottom line is the government needs the money and the IRS is going to be charged with finding the dollars no matter where it is.