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IRS Has Recovered Over $1.1B from Rich Individuals, Including $172M from 21K Who Had Not Filed Returns Since 2017

By:
Ruth Singleton
Published Date:
Sep 6, 2024

Sec_Yellen_Portrait-240
Treasury Secretary Janet L. Yellen

On Sept. 6, U.S. Secretary of the Treasury Janet L. Yellen and IRS Commissioner Danny Werfel announced the IRS's recent achievements under Inflation Reduction Act initiatives to make sure that wealthy individuals pay the taxes they owe. They planned to make their announcement in remarks at the IRS campus in Austin, Texas.  

In her remarks, Yellen said, “Between 2010 and 2018, the audit rate for millionaires fell by 80 percent. And during the previous Administration, as audit rates on high-income taxpayers fell, the share of audits on taxpayers with incomes under $200,000 increased. In 2019, the top one percent of Americans was estimated to owe over one-fifth of unpaid taxes. That left ordinary Americans to shoulder the burden. To fix this, we’ve channeled IRA funding toward significant investments to combat tax evasion."

PBS News published a video of her speech.

“I am glad to now share the first results of an initiative we launched to pursue 125,000 wealthy taxpayers who had not filed taxes for years," Yellen said. "The IRS had not had the resources to pursue these wealthy non-filers. Now, it does, and we’re making significant progress. Today, I am announcing that, in only six months, nearly 21,000 of these taxpayers have already filed. That has led to $172 million recovered. This is just a first milestone, and we look forward to more progress ahead.

“The IRS has also made substantial progress to collect tax debt from wealthy filers. I am glad to share today that nearly 80 percent of 1,600 millionaires with delinquent tax debt have now paid, leading to over $1.1 billion recovered. This is an additional $100 million since July, when we announced reaching the $1 billion milestone.

"The IRS has also launched audits of 76 of the largest partnerships, from hedge funds to law firms, with average assets of $10 billion. It’s working to close a major tax loophole exploited by complex partnerships; has cracked down on the abuse of corporate jets for personal travel; and is now launching audits of the 60 largest corporate taxpayers, with average assets of $24 billion.

"These efforts matter. They are advancing fairness: It’s not right that everyday Americans pay taxes while struggling to make ends meet, but some of the wealthiest in this country have been able to evade payment."

In the fall of 2023, the IRS began a new initiative using Inflation Reduction Act funding to pursue wealthy individuals who had not paid recognized tax debt, with dozens of senior employees assigned to these cases. This work focused on taxpayers with more than $1 million in income and more than $250,000 in recognized tax debt. The IRS was previously unable to collect from these individuals due to a lack of resources. After successfully collecting $38 million from more than 175 high-income, high-wealth individuals last year, the IRS expanded this effort last fall to around 1,600 more of these individuals. Nearly 80 percent of these 1,600 millionaires with delinquent tax debt have now made a payment, leading to over $1.1 billion recovered.

This past February, the IRS reported that it “launched an initiative to pursue 125,000 high-income, high-wealth taxpayers who have not filed taxes since 2017. These are cases where IRS has received third party information—such as through Forms W-2 and 1099s—indicating these people received income between $400,000 and $1 million or more than $1 million, but failed to file a tax return."

Yellen and Werfel also announced the IRS's accomplishments in improving service for taxpayers through the Digital First Initiative and modernizing foundational technology.

With Inflation Reduction Act resources, the IRS said that it is significantly improving taxpayer service in person, over the phone and online. The agency said that it is working to deliver the same modern online experience that taxpayers experience with their bank or financial institutions. Using Inflation Reduction Act resources, it has created and improved online tools that save taxpayers time and money, while also reducing phone calls, paper processes and other burdens on IRS employees. For example, in the 2024 filing season, the IRS updated the “Where’s My Refund?” tool to provide more detailed refund status information in plain language, increasing its use by nearly 30 percent.

With the help of Inflation Reduction Act resources, the IRS noted, it has launched more digital tools in the last two years than in the previous 20 years, including more than two dozen new features and enhancements to individual and tax professional online accounts; the launch of the business tax account; the release of 30 digital mobile-adaptive forms; the ability for taxpayers to receive their refund status via a conversational hotline; a mobile-friendly web tool for Where’s My Refund; and Direct File, a new tool that allows taxpayers to file for free, directly with the IRS.

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