The U.S. Department of the Treasury and Internal Revenue Service (IRS) have announced a significant milestone in their initiative to collect past-due tax debt from high-income, high-wealth individuals. This effort, enabled by resources from President Biden’s Inflation Reduction Act, has recovered over $1 billion to date.
Launched in 2023, the initiative targets taxpayers with incomes exceeding $1 million and recognized tax debts over $250,000. Dozens of senior IRS employees have been assigned to these cases. “President Biden’s Inflation Reduction Act is increasing tax fairness and ensuring that all wealthy taxpayers pay the taxes they owe, just like working families do,” said U.S. Secretary of the Treasury Janet L. Yellen. She added that this initiative has already proven successful.
Last year, the IRS reported collecting $38 million from more than 175 high-income individuals as an initial success. The effort was expanded last fall to include 1,600 additional high-wealth individuals, with more than 1,500 cases now assigned to senior employees and resulting in over $1 billion collected so far.
Budget cuts prior to the Inflation Reduction Act had hindered the IRS’s ability to address increasing complexity and ensure compliance among wealthy taxpayers and large corporations. This current effort is part of broader initiatives aimed at improving tax fairness and reducing the deficit. Other initiatives launched by the IRS in recent years include:
– Cracking down on abuse of corporate jets for personal travel.
– Collecting taxes owed by 125,000 high-income earners who have not filed taxes for years.
– Auditing 76 large partnerships across various industries.
– Auditing 60 major corporate taxpayers.
– Implementing new regulations to close a tax loophole used by complex partnerships.
These measures are expected to enhance tax fairness and reduce the gap between taxes owed and paid, thereby decreasing the deficit. According to new Treasury and IRS analysis, continued investments as proposed by President Biden could generate an additional $851 billion in revenue over the next decade.
Secretary Yellen reaffirmed that these enforcement efforts will not increase audit rates for Americans earning less than $400,000 annually.
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