Many millionaires don’t abide by this rule in a world where it is a civilian’s responsibility to file income tax returns. Irrespective of the severe consequences they may face, there are still around 1,000 millionaires who have not filed their returns.
The question is:
Why millionaires don’t file income tax returns?
The following are some factors that contribute to the millionaire’s reluctance towards tax filing:
Complex Financial Structures
Wealthy people often have a complex financial system with multiple sources of income, investments, trusts, international transactions, etc. So, it can be tricky to manage all these finances. Hence, they avoid filing tax returns because it will require them to report all their financial transactions.
Tax Avoidance Strategies
These millionaires often appoint legal aid that gives them certain avoidance strategies. It appears as if they owe no tax to the government, but in reality, they are avoiding the tax. These strategies seem legal, but with closer scrutiny, they can cause legal issues.
Overlooking Deadlines
Another possibility is that they just ignore or overlook the need to file taxes. It can happen when they have professional delegates who handle their finances for them.
Deliberate Tax Evasion
Some millionaires evade taxes by underreporting their income or hiding assets. These are illegal activities that can bring them trouble.
What are the Consequences of not Filing Taxes?
Rich people who don’t file tax returns can experience severe consequences. There are officials affiliated with the Internal Revenue Service who have various tools and methods for identifying people who need to file their taxes. They can pursue legal actions against these individuals and charge penalties, confiscate assets, charge criminal offences or imprisonment, etc.
The Need for a Broader Tax System
The lack of compliance towards filing taxes raises another question. Is there a need for a better taxation system? A big yes! When a large group of well-earning individuals evade taxes, the government must bring more transparency, accountability and enforcement to tax laws. So that all taxpayers, irrespective of their wealth, comply with these laws and timely file tax returns.
The revelation of 1000 millionaires’ lack of compliance towards tax return filing is alarming. This revelation demands more attention from the authorities. Moreover, it shows people’s ignorance and lack of understanding towards financial matters. In such a situation, people can hire auditors who can handle their financial reporting for them and keep them from this stress.
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