The IRS announced today that it has collected more than $1 billion since last fall from millionaires who were past due on taxes.
The agency said the collections came after examiners focused on 1,600 individuals with incomes of more than $1 million per year who each owed more than $250,000 in federal taxes. The IRS noted that its enforcement efforts involving this group are ongoing.
“With this collection activity, the IRS passed an important milestone in our effort to improve compliance and ensure fairness in the tax system,” IRS Commissioner Danny Werfel said in a prepared statement. “Our increased work in this area means these past-due tax bills from high-end taxpayers are no longer being left on the table, like they were too often in the past.”
The agency's announcement comes shortly after a Treasury inspector general report that said the IRS has recently shifted its focus from mega-rich taxpayers to those who have annual incomes of more than $400,000. The report, which quoted anonymous IRS executives, said the shift happened after the agency concluded it wasn't yielding enough in back taxes to justify focusing on only the top end of the wealth spectrum.
In its announcement today, the IRS said that under an initiative it announced earlier this year, it is focusing on taxpayers who have failed to file federal income tax returns in more than 125,000 instances since 2017. This initiative, the agency said, involves 25,000 people with more than $1 million in income, and 100,000 people with incomes between $400,000 and $1 million between the tax years of 2017 and 2021.
“Years of funding declines meant the IRS couldn’t get to money that we knew was owed, but we simply didn’t have the resources or staffing to collect,” Werfel said. “Funding from the Inflation Reduction Act is reversing a decade-long decline in our compliance work, including increasing our compliance work involving the wealthiest individuals and groups with tax issues. The collection results achieved in less than a year reveal the magnitude of what can be achieved over the long run as our Inflation Reduction enforcement continues to ramp up in the months ahead.”
In addition to the focus on wealthy taxpayers, the agency is pursuing "complex partnerships, large corporations and high-income, high-wealth individuals who do not pay overdue tax bills," the agency said.
“We continue working to add staff and technology to ensure that the taxpayers with the highest income, including partnerships, large corporations and millionaires and billionaires, pay what is legally owed under federal law,” Werfel said. “At the same time, we are focused on improving our taxpayer service for hard-working taxpayers. The additional resources the IRS received under the Inflation Reduction Act are making a difference, both for taxpayers who play by the rules and those who don’t.”