In less than a year, the Internal Revenue Service (IRS) has been able to capture over $1 billion in unpaid taxes, the agency announced on Thursday, due to its new campaign targeting wealthy tax cheats.
As part of new funding provided by Democrats’ Inflation Reduction Act, the agency has targeted 1,600 people with incomes over $1 million who owed more than $250,000 in taxes, the agency said. Just since last fall, the amount that the agency has collected from 1,200 people in this group has topped $1 billion — and the agency expects that figure to grow in coming months.
The figure represents an “important milestone,” Commissioner Danny Werfel said, for the IRS’s fight against tax dodging by the wealthy — an incredibly prolific practice that has grown in recent decades due to the right’s funding cuts to the IRS, which have severely hampered the agency’s ability to ensure tax compliance from the wealthy.
“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,” Werfel said.
The commissioner and Treasury Secretary Janet Yellen thanked the Inflation Reduction Act for allowing the IRS to pursue such overdue tax bills, with Werfel saying the funding has played a major role in allowing the IRS to beef up its resources and staffing to levels it needs.
“Funding from the Inflation Reduction Act is reversing a decade-long decline in our compliance work,” Werfel 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.”
The agency collected the missing taxes through initiatives within the agency that were previously under resourced, going after wealthy people who simply never filed a tax return and other common areas for tax avoidance for the rich, like shifting money to related parties in order to obscure assets; a recent rule proposed by the Treasury Department to put an end to so-called partnership basis shifting is estimated to raise $50 billion in taxes over the next decade, the agency said.
Republicans have fiercely opposed the extra IRS funding and created an entire fear mongering campaign about IRS agents going after taxpayers with the new funding when it was passed. The campaign was meant to make the average American feel as though they were going to be targeted by the IRS, rather than the wealthiest 1 percent of Americans. Regardless, Republicans have succeeded in clawing back $20 billion from the $80 billion set aside for the IRS in the Inflation Reduction Act.
Lawmakers have said that the funding’s results speak for themselves.
“Democrats boosted IRS funding, and it’s already gotten back $1 BILLION from millionaire tax cheats,” said Sen. Elizabeth Warren (D-Massachusetts). “Republicans want to cut IRS funding again to protect their rich tax-dodging buddies — no way.”
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