The IRS recovers $1.3 billion from wealthy tax dodgers, exposing a system where the rich have long evaded their fair share.
At a Glance
- IRS reclaims $1.3 billion from high-income tax delinquents since fall 2023
- Recovery attributed to increased enforcement funded by 2022 Inflation Reduction Act
- 80% of 1,600 millionaires with overdue taxes have paid, contributing $1.1 billion
- IRS targeting 125,000 wealthy taxpayers who haven’t filed taxes in years
- Controversial funding sparks debate over IRS intentions and capabilities
IRS Cracks Down on Wealthy Tax Evaders
Since the fall of 2023, the IRS has recovered a staggering $1.3 billion from wealthy individuals who failed to file returns or fully pay their owed taxes. This aggressive enforcement is a direct result of increased funding provided by the 2022 Inflation Reduction Act.
Treasury Secretary Janet Yellen has been vocal about the initiative’s purpose, stating it’s “to crack down on tax evasion so that high earners pay what they owe.” This move comes after years of declining audit rates for millionaires, which had fallen by 80% between 2010 and 2018. The IRS is now targeting approximately 125,000 wealthy taxpayers who haven’t filed taxes in years, sending a clear message that tax evasion will no longer be tolerated.
The IRS has collected $1.3 billion from high wealth tax dodgers since last fall, the agency announced Friday. https://t.co/l3RzujEOGo
— ABC News (@ABC) September 6, 2024
Millionaires Pay Up Under Pressure
The crackdown has yielded impressive results. Of the 1,600 millionaires identified with overdue taxes, 80% have now paid up, contributing an additional $1.1 billion to the treasury. Furthermore, $172 million was recovered from 21,000 wealthy taxpayers who had not filed tax returns since 2017. These figures demonstrate the effectiveness of the IRS’s renewed focus on high-income tax delinquents.
While the recovery of $1.3 billion is substantial, it’s important to note that this amount is just a fraction of the estimated $150 billion lost annually to tax evasion by millionaires and billionaires, according to IRS Chief Danny Werfel. This underscores the magnitude of the problem and the potential for even greater recoveries as enforcement efforts continue.
Since 2023, the IRS has collected almost $1.3 billion in back-taxes owed by millionaires. The program only targeted people who make more than $1 million a year and owed more than $250,000 to the IRS. https://t.co/UmuWGJ3vtV
— WTHR.com (@WTHRcom) September 6, 2024
Controversy Surrounding IRS Funding
The increased funding for the IRS has not been without controversy. Some Republican lawmakers have worried that the agency plans to use the funds “to audit Walmart shoppers” or hire 87,000 new agents specifically for audits. The IRS has responded by stating that the funding is primarily for improving taxpayer services and modernizing outdated systems.
The IRS employs approximately 681 armed agents, according to the National Taxpayer Advocate’s 2023 report. The agency says its focus is on high-income individuals and large corporations, not on average Americans.
Modernizing Tax Services
Beyond enforcement, the IRS is using its new funding to improve taxpayer services. The agency has launched a Direct File program for simple W-2 tax returns, resulting in over $90 million in refunds. This program is expanding from 12 states in 2024 to include more states in 2025. Additionally, the IRS is implementing a Digital First Initiative to enhance online tools and services, allowing taxpayers to conduct more transactions digitally.
