When a taxpayer who has a tax filing requirement fails to file a tax return, the IRS is allowed to use third-party information to determine a tax liability and assess it. The IRS handles these cases mostly through the ASFR Program, which enforces filing compliance against taxpayers who haven’t filed individual income tax returns but seem to owe a lot of money in taxes.

“The Automated Substitute for Return (AFSR) program is a component of our collection strategy to promote filing compliance,” wrote Mary Beth Murphy, commissioner of the IRS’s Small Business/Self-Employed Division, in response to the report. “Attempting to bring noncompliant taxpayers into compliance ensures fairness and reduces the burden on taxpayers who fully pay their taxes on time. Resource constraints have forced us to make difficult decisions with respect to some of our programs, even those that provide clear benefits to tax administration. Because a nonfiler strategy is important to our mission, we are currently working to develop one that fits within the current and future IRS operating environment, requiring fewer human resources, while providing an opportunity for us to achieve our desired outcomes.”

Full story here: IRS scales back program to go after people who don’t file taxes | Accounting Today