A government watchdog says a systemic delay inside IRS collections likely cost the Treasury money it could otherwise already have recovered. According to a September report from the Treasury Inspector General for Tax Administration, nearly 39,000 high-priority nonfiler cases sat frozen in an early stage of the enforcement process for more than a year, and TIGTA calculates that acting on them sooner could have produced roughly $321 million in additional tax. The IRS has since moved to fix the underlying problem, but the episode shows how a single internal decision can quietly stall enforcement that most taxpayers assume runs on its own.
How Cases Ended Up Stuck in “First-Notice” Status
The finding comes from a TIGTA review of the IRS’s high-income nonfiler initiative, which launched in February 2024 to monitor 135,270 cases involving taxpayers earning $400,000 or more, federal employees, and others identified through a Senate Finance Committee request. IRS collection function management requested in March 2024 that final notices be delayed because of concerns about the resources available to work the cases. That decision prevented the cases from moving through the agency’s normal return-delinquency process and stopped additional collection notices and enforcement actions from going out.
As of June 30, 2025, 38,824 high-priority cases involving 33,653 taxpayers were still sitting in first-notice status, representing about $15.7 billion in potential tax assessments, according to the Journal of Accountancy’s report on the audit.
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Why TIGTA Landed on $321 Million
TIGTA’s auditors estimated that earlier action on the stalled cases could have resulted in returns or assessments in 10,482 of them, involving roughly $321.3 million in additional tax, an amount TIGTA says the IRS can still collect. TIGTA told the Journal of Accountancy that its auditors alerted the IRS during the review that the cases were stuck because of a systemic error, and that after working with the agency to trace the cause, the IRS took action to move the accounts forward so that taxpayers would receive final notices and potentially face further enforcement. The IRS agreed with all six of TIGTA’s recommendations and advanced the affected cases in March 2026.
The Delay Wasn’t Confined to First-Notice Cases
The same review found a second backlog sitting one step further along: 10,969 high-priority cases involving 8,853 taxpayers were still waiting in the IRS collection queue for assignment as of June 30, 2025, representing about $2.5 billion in potential tax liability. TIGTA estimated that prioritizing that queue could have produced returns or assessments in 2,962 cases involving 2,399 taxpayers, worth roughly $90.8 million, and noted the IRS had already trimmed the queued backlog to 9,463 cases by December 31, 2025. In a separate wrinkle, TIGTA also found that 4,918 cases involving 4,748 taxpayers received nonfiler notices despite having already filed, because their returns simply hadn’t been processed and posted yet; 1,433 of those returns took more than a year to post, which TIGTA said compromised those taxpayers’ right to quality service even though they had done nothing wrong.
The IRS’s Response Leans on Automation, Not Just Staffing
In its formal response, the IRS said it has expanded nonfiler enforcement in recent years, including the high-income initiative at the center of this review, and is now using analytics, automation, and artificial intelligence to identify potential noncompliance earlier and improve which cases get worked first. The agency framed this as a way of focusing limited enforcement resources on taxpayers who pose the greatest compliance risk while balancing nonfiler work against its other priorities. TIGTA’s broader concern is structural rather than technological: the report notes that the IRS’s Nonfiler Executive Steering Committee has not met since September 2020, and that the agency does not separately track how much staff time or budget goes toward nonfiler programs specifically, which makes it hard for IRS management to judge whether any individual enforcement effort, automated or not, is actually working.
The cost of the IRS waiting
None of the fixes TIGTA describes help an individual taxpayer who is caught on the wrong side of a stalled case, whether that means a delayed enforcement notice, a return that took over a year to post, or confusion about which stage a case is actually in. Reading an IRS notice correctly, and tracing what has or hasn’t happened with a return that’s already been filed, isn’t something a taxpayer can look up in a TIGTA audit.
The IRS Refund Recovery Kit is a 13-page kit built around a notice decoder and the refund-trace steps under Form 3911, along with the 3-year deadline for claiming an unclaimed refund.
Match a notice to next steps in The IRS Refund Recovery Kit.
This article was researched and drafted with the assistance of AI and reviewed by an editor.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
