Treasury and IRS announce'major milestone' of $1 billion in back taxes recovered from wealthy

The United States Department of Treasury and the Internal Revenue Service announced on Thursday a "major milestone" of collecting more than $1 billion in tax debt from high-income individuals over the last year. With tens of billions of dollars in new money, the IRS revealed intentions in September to increase its inspection of persons earning more than $1 million per year who have more than $250,000 in recognized tax liability.

Jul 11, 2024 - 06:18
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Treasury and IRS announce'major milestone' of $1 billion in back taxes recovered from wealthy
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"The IRS has collected $1 billion from millionaires, demonstrating that it can successfully launch strategic new initiatives and achieve the highest return on investment," Treasury Secretary Janet Yellen told reporters during a news conference.

If funding is maintained, the IRS's efforts in enforcement, technology, and data may yield up to $851 billion by 2034, the agencies predicted in February.

The Inflation Reduction Act of 2022, which increased IRS budget, continues to be criticized, particularly by legislative 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 stated during the press conference.

Werfel stated that delinquent taxes collected from similar earnings were negligible prior to the Inflation Reduction Act funding owing to financial restrictions. "The difference is really like night and day," he told me. 

The IRS reported that the audit rate for taxpayers earning $1 million or more was 0.7% in 2019, the most current statistics available, compared to 7.2% in 2011.

The U.S. Government Accountability Office and the Treasury Inspector General for Tax Administration have lately investigated the IRS's high-income audit procedure. While both agencies' reports discussed the audit selection process, the Treasury report particularly mentioned a higher no-change rate in audits of some high-income taxpayers.

"Our goal is always to eliminate the risk of a zero-balance-due audit," Werfel stated on the press teleconference regarding the agencies' reports

The latest revelation comes less than a month after the IRS and Treasury announced efforts to tackle what they described as a "major tax loophole" utilized by huge, sophisticated partnerships. The crackdown could generate $50 billion in tax income over the next decade, according to the agencies.

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