IRS says it has collected $1 billion in back taxes from millionaires

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

Kevin Dietsch | Getty Images News | Getty Images

The U.S. Treasury Department and the IRS announced Thursday that they have reached a “significant milestone”: collecting more than $1 billion in tax debt from high-income earners over the past year.

With tens of billions in new funding, the IRS in September announced plans to expand audits to people who earn more than $1 million annually and have a recognized tax debt of more than $250,000.

“The IRS has collected $1 billion from millionaires and has demonstrated its ability to successfully launch strategic new initiatives and achieve the highest returns on investments,” Treasury Secretary Janet Yellen told reporters at a news conference.

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If funding continues, the IRS's investments in enforcement, technology and data could yield up to $20 million. $851 billion to 2034the authorities estimated in February.

The injection of IRS funding, which was introduced in 2022 through the Inflation Reduction Act, continues to face criticism, especially among Republicans in Congress.

“For the past decade, the IRS has not had the resources or personnel to pursue high-income individuals who our compliance team knew owed taxes,” IRS Commissioner Danny Werfel said at the news conference.

Werfel said unpaid taxes collected from comparable earners were negligible before the Inflation Reduction Act was funded because of budget constraints. “The difference is really 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 theirs.

Both the U.S. Government Accountability Office and the U.S. Treasury Inspector General for Tax Administration have recently researched theirs' high income audit process. While both agencies' reports addressed the audit selection process, the Treasury report specifically cited an increased rate of no change among audits of certain high-earning filers.

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

IRS Commissioner Danny Werfel on Taxing the Rich, Restoring Fairness, and Using AI

The latest announcement comes less than a 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, the agencies said.

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