IRS says it’s collected $1 billion in past-due taxes from millionaires

IRS says it’s collected $1 billion in past-due taxes from millionaires

Internal Revenue Service Commissioner Danny Werfel testifies before the House Appropriations Committee on Capitol Hill in Washington, May 7, 2024.

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The U.S. Department of the Treasury and the IRS on Thursday announced what they called a “major milestone” of collecting more than $1 billion in tax debt from high-income individuals over the past year.

With tens of billions in new funding, the IRS announced plans in September to expand its scrutiny of those making above $1 million annually with more than $250,000 in recognized tax debt.  

“The IRS has collected $1 billion from millionaires and shown that it can successfully launch strategic new initiatives and achieve the greatest return on investment,” Treasury Secretary Janet Yellen told reporters during a press call.

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If funding is sustained, IRS investments in enforcement, technology and data could generate up to $851 billion through 2034, the agencies estimated in February.

The infusion of IRS funding, enacted via the Inflation Reduction Act in 2022, still has its critics, however, particularly among congressional Republicans.

“During the past decade, the IRS didn’t have the resources or staffing to pursue high-income earners who our compliance team knew owed taxes,” IRS Commissioner Danny Werfel said during the press call.

Werfel said unpaid taxes collected from similar earners were negligible before Inflation Reduction Act funding due to budget constraints. “The difference is really like night and day,” he said. 

The audit rate for taxpayers earning $1 million or more was 0.7% in 2019, the most recent data available, compared with 7.2% in 2011, according to the IRS.

Both the U.S. Government Accountability Office and the U.S. Treasury Inspector General for Tax Administration have recently scrutinized the IRS’ high-income audit process. While both agencies’ reports addressed its audit selection process, the Treasury report specifically called out an elevated no-change rate among audits of certain high-earning filers.

“Our goal is always to eliminate the risk of a zero-balance-due audit,” Werfel said on the press call about the agencies’ reports.

The latest announcement comes less than one month after the IRS and Treasury unveiled plans to close what they called a “major tax loophole” used by large, complex partnerships. The crackdown could raise $50 billion in tax revenue over the next 10 years, according to the agencies.

Original news source Credit: www.cnbc.com

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