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IRS faces issues in crackdown on high-income non-filers

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1 year ago

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The Internal Revenue Service has been conducting “sweeps” in recent years to uncover cases where high-income people have not been filing taxes, but the tracking data and training need to be improved, according to a new report.

The report, released last week by the Treasury Inspector General for Tax Administration, found that high-income nonfiler sweeps cases worked on by IRS revenue officers from fiscal years 2021 through 2022 were more impactful in terms of case closures and dollars collected than similar non-sweeps cases. As a percentage of the overall cases they worked on, revenue officers secured more returns under sweeps than non-sweeps and referred significantly more returns to the IRS’s Examination function. “For tax years 2014 through 2020, revenue officers consistently collected more per sweep case than non-sweep case,” said the report.

Sweeps are a strategy employed by the IRS to either address an increase in its unassigned high-priority inventory of tax cases in an understaffed location or to support a compliance initiative, such as egregious employment tax cases and high-income nonfilers. The IRS expanded the use of sweeps between fiscal years 2019 and 2022.

Last year, former IRS Commissioner Danny Werfel announced an initiative in which it began sending notices to high-income people who haven’t been filing tax returns since 2017.

“When people don’t file a tax return they’re required to, it’s not fair to those hardworking taxpayers who responsibly do their civic duty under the laws of our nation,” he said during a press call last year. “When people don’t file their taxes, they need to know there’s a consequence. And this is why I was particularly troubled to learn when I became commissioner that the IRS had to back off our core compliance work on non-filers. Due to severe budget and staff limitations, the IRS non-filer program has only run sporadically since 2016. This program pullback didn’t happen because of lack of information. The IRS knows who these non-filers are. The IRS has the third-party information, such as through Forms W-2 and 1099, indicating these people received significant income but failed to file a tax return. The IRS has known these people are out there, and they involved some very prosperous households.”

Sweeps were conducted throughout the U.S. and internationally, the TIGTA report noted, but there were several geographic areas in the continental U.S. that have a high number of high-income nonfilers where limited or no sweeps were done. The report suggested opportunities for more sweeps in places like eastern New Mexico, western Texas, northwestern Nevada and Wyoming. 

However, it’s unclear whether the IRS will be prioritizing such sweeps in the future, given the layoffs underway at the agency. On Monday, TIGTA reported that more than 11,000 IRS employees have been laid off so far this year, or about 11% of the workforce, under the Trump administration’s efforts to reduce the size of the federal workforce, with cuts especially heavily among revenue agents, where 31% have been laid off or agreed to participate in the voluntary buyout program. 

There were other areas where the sweeps could be improved. The review found that missing, incomplete, and/or inaccurate data were found in data fields such as the taxpayer’s name, address, revenue officer identifier and case assignment date. These errors were not identified and corrected before TIGTA’s review. 

TIGTA said it worked with the IRS to make corrections so the data reviewed for the audit were accurate and complete. However, it suggested the IRS would benefit from complete and accurate data to track the results of sweeps. 

The IRS’s Field Collection team is not always using sweeps to help train and develop employee skills, the report noted. And while the sweeps desk guide provides the IRS with many opportunities to develop employee skills, managers at the IRS’s Collection unit are not always taking advantage of them. Those kinds of activities have the potential to make sweeps an even more effective tool. 

TIGTA recommended that the IRS’s Small Business/Self-Employed Division’s director of Field Collection should continue to identify and perform sweeps of all types, including assessments of high-risk geographical areas as well as issue-based sweeps. The report also suggested the IRS should regularly review sweeps data to identify and correct errors and ensure it’s accurate and complete before using it for management reporting. The IRS should also capture more information in the tracking spreadsheet so management can better assess the productivity of each sweep, the report recommended. That should include information such as which delinquent tax return modules were secured, whether any of the returns had tax assessments, and the results of specific collection initiatives. In addition, the IRS should remind all levels of management of the sweeps desk guide procedures and provide refresher training on their responsibilities in the sweeps process, the report recommended. IRS management agreed with all of TIGTA’s recommendations.

“We appreciate the audit team’s efforts to understand Field Collection employees’ experiences with Sweeps through revenue officer and manager interviews,” wrote Lia Colbert, commissioner of the IRS’s Small Business/Self-Employed division, in response to the report. “Their experiences and feedback conveyed the positive impact of Sweeps, and the importance of raising awareness of tax laws and compliance for many taxpayers in communities across the country.”

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Accounting

AI-Driven Automation and Continuous Accounting Frameworks

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2 hours ago

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August 15, 2026

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The accounting profession is undergoing a fundamental structural transition as enterprise finance departments shift from periodic month-end closes toward automated continuous accounting models. By integrating specialized machine learning algorithms directly into enterprise resource planning (ERP) platforms, chief accounting officers are transforming financial reporting from a retrospective exercise into a real-time operational asset.

The Shift from Periodic Close to Continuous Financial Reporting
Traditional accounting workflows heavily relied on manual data reconciliation, spreadsheet calculations, and multi-week closing cycles at the end of each fiscal period. In contrast, continuous accounting frameworks utilize automated software agents to process, validate, and post transactional data in real time as business activities occur.

Automated bank reconciliation tools cross-reference incoming bank feeds, invoice records, and purchase orders automatically. By resolving transactional variances instantly throughout the month, corporate accounting teams eliminate the traditional workload spikes associated with quarterly and annual closes.

Machine Learning in Audit Trails and Anomaly Detection
Advanced natural language processing (NLP) and machine learning tools are redefining internal audit and financial control environments. Automated systems analyze 100% of general ledger entries, identifying anomalous transactions, duplicate payments, and unauthorized journal entries in real time.

Rather than relying on random statistical sampling, corporate internal auditors can focus their attention on high-risk flags automatically surfaced by algorithmic monitoring platforms. This continuous risk assessment strengthens internal controls over financial reporting (ICFR) and significantly reduces fraud risk.

Evolving Roles for Accounting Professionals
As routine data entry and manual reconciliation tasks become fully automated, the skill set required for accounting professionals is shifting toward data analysis, system design, and strategic business advisory.
– Systems Governance: Accountants are increasingly responsible for monitoring algorithmic accuracy and managing data integration pipelines.
– Business Partnership: Finance professionals leverage real-time financial dashboards to advise operational leaders on margin management and working capital allocation.
– Regulatory Compliance Management: Accounting teams utilize automated platforms to ensure compliance with dynamic tax codes and international accounting standards.

Core Implementation Recommendations
1. Deploy Automated Reconciliation Tools: Integrate continuous transaction processing modules into existing enterprise ERP architectures.
2. Establish Algorithmic Governance Controls: Implement strict internal testing protocols to ensure automated accounting rules comply with GAAP/IFRS standards.
3. Reskill Accounting Teams: Invest in training finance staff on data analytics, workflow automation, and predictive financial modeling.

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Accounting

Global ESG Reporting Standards and Double Materiality Compliance

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6 days ago

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August 9, 2026

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Corporate accounting departments face expanding reporting expectations as international sustainability disclosure standards achieve regulatory enforcement across major global jurisdictions. Chief Accounting Officers (CAOs) and corporate controllers are establishing rigorous internal accounting controls to treat Environmental, Social, and Governance (ESG) metrics with the same data precision, auditability, and governance as traditional financial statements.

Regulatory Harmonization Under Global Sustainability Frameworks
The implementation of standardized sustainability reporting frameworks—notably rules established by international sustainability accounting boards—has created unified expectations for public and large private enterprises. Corporations must report standardized metrics covering greenhouse gas emissions (Scope 1, 2, and material Scope 3), energy utilization, workforce demographics, and supply chain governance.

In Europe and other participating international jurisdictions, double materiality principles are mandatory. Under double materiality, organizations must report both how external sustainability risks impact corporate financial performance, and how internal corporate operations affect surrounding environmental and social structures.

Integrating Sustainability Metrics into Core ERP Systems
To provide auditable non-financial data, enterprise organizations are integrating specialized carbon accounting and ESG management platforms directly into core ERP systems. Automated data collectors capture energy utility invoices, logistics fuel consumption metrics, and vendor compliance records in real time.

Establishing automated, traceable data pipelines ensures that non-financial reporting is supported by clear audit trails. This structured approach allows external financial auditors to provide reasonable assurance on sustainability disclosures during annual corporate reporting cycles.

Financial Impacts and Capital Market Disclosure
Accurate ESG reporting directly influences corporate cost of capital and institutional credit ratings. Commercial lenders and institutional asset managers systematically incorporate sustainability metrics into risk pricing models. Companies that demonstrate transparent, verifiable progress in operational energy efficiency and climate risk mitigation benefit from expanded access to green bond markets and lower debt pricing.

Action Steps for Accounting Leadership
1. Implement Double Materiality Frameworks: Conduct comprehensive assessments to identify material financial and operational sustainability metrics.
2. Build Auditable Non-Financial Data Pipelines: Automate ESG data collection within core accounting software to ensure data integrity.
3. Align Sustainability with Annual Financial Filings: Prepare non-financial disclosures concurrently with financial statements to satisfy regulatory audit expectations.

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Accounting

Modernizing Internal Controls: Machine Learning and Continuous Monitoring in Auditing

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1 week ago

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August 5, 2026

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Internal audit departments and corporate risk managers are modernizing internal control frameworks by shifting from periodic sampling techniques to continuous monitoring and machine learning analytics. As operational data volumes increase across enterprise organizations, automated control testing ensures financial integrity, prevents corporate fraud, and streamlines annual audit engagements.

The Limitation of Periodic Audit Sampling
Historically, internal and external auditors evaluated internal controls by reviewing random samples of financial transactions—often analyzing less than five percent of total ledger entries. In complex enterprise environments, periodic sampling methods carry inherent risks of overlooking localized financial misstatements, unauthorized disbursements, or operational control breakdowns.

In 2026, progressive internal audit functions are utilizing automated continuous monitoring platforms that evaluate one hundred percent of financial transactions in real time. Continuous control auditing systems continuously monitor general ledger entries, procurement approvals, and expense reimbursements across all operating subsidiaries.

AI-Powered Fraud Detection and Anomaly Identification
Machine learning models trained on historical corporate financial data excel at identifying subtle transactional anomalies that indicate potential fraud or operational error. Automated systems instantly flag duplicate invoice payments, unapproved vendor creation, unusual journal entry timing, and unauthorized override of authority thresholds.

When an anomaly is detected, the automated auditing platform generates an instant risk alert, allowing internal audit teams to investigate root causes immediately. Early detection prevents minor operational errors from escalating into material weaknesses in financial reporting.

Streamlining External Audit Preparation
Continuous internal control monitoring delivers significant benefits during annual external financial audits. External audit firms can review continuous audit logs and automated control testing documentation, reducing the time required for manual field testing.

This integrated approach lowers overall audit compliance fees, reduces administrative burdens on corporate accounting staff, and provides senior management and audit committees with real-time visibility into the organization’s overall risk profile.

Core Implementation Guidelines
1. Transition to 100% Data Testing: Replace legacy sampling methods with automated continuous audit monitoring systems.
2. Deploy Anomaly Detection Algorithms: Implement machine learning models to identify unauthorized transactions and operational control overrides.
3. Align Internal and External Audit Workflows: Coordinate continuous control testing protocols with external auditors to optimize annual compliance cycles.

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