IRS Effort to Target Wealthy Tax Cheats Yields a Goldmine

IRS Cracks Down on Tax Dodgers, Recovers $172 Million

The IRS put high-income tax dodgers on notice in February when it announced an initiative to go after wealthy non-filers. Now, the agency reports that it’s made “significant progress” – to the tune of $172 million.

Effort Not Targeted at Middle-Class Taxpayers

Everyday folks don’t need to worry: The Biden-Harris administration has a longstanding commitment not to raise taxes on individuals earning less than $400,000, and officials say recent tax compliance work isn’t targeted at Americans under that threshold, either. With this latest effort to “crack down” on tax evasion, the IRS began to chase down about 125,000 people who hadn’t filed tax returns since 2017.

High-Income Tax Dodgers Identified

Of those cases, 25,000 had over $1 million in annual income, and the other 100,000 were earning over $400,000. The IRS says it was able to identify these high-income non-filers based on tax forms from third parties, namely W-2s and 1099s.

Recent Tax Payments Come from Initially Contacted Individuals

On Friday, the IRS announced it collected that $172 million from 21,000 of those people, and a senior Treasury official suggested on a press call that’s only the beginning of what could be closer to a $1 billion recovery project. So far, the tax payments have largely come from people who responded to initial IRS outreach informing them that they were on the agency’s radar for not filing tax returns.

Inflation Reduction Act Provided Additional Funding

The Inflation Reduction Act, signed in 2022, provided additional funds for the IRS to try to get high-income and high-wealth individuals to pay taxes they owe the government. Previously, the IRS said, it lacked the resources to pursue these taxpayers, and the “non-filer program ran sporadically since 2016 due to severe budget and staff limitations.”

Biden-Harris Administration Officials Defend Effort

“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,” Secretary of the Treasury Janet Yellen said at an event in Austin Friday.

Controversy Surrounds IRS Effort

The IRS’s crackdown on wealthy taxpayers remains controversial in Washington, as Republicans argue it’s a poor use of government resources. It may even become an election issue in the tight race between Vice President Kamala Harris and former President Donald Trump.

Government Officials Vow to Keep Up Pressure

Yellen has lambasted those in Congress who want to cut IRS funding, saying Friday that would “make it easier for wealthy Americans and corporations to avoid paying what they owe while working Americans foot the bill.”

Further Initiatives Aimed at High-Income Individuals

In any case, as officials tout the IRS’s progress in finding non-filers, they’re also talking up several related initiatives to get the wealthy to pay their fair share in taxes.
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