The U.S. Department of the Treasury and Internal Revenue Service (IRS) reached a major milestone, collecting $1 billion in overdue taxes from high-income individuals.
The effort was made possible by resources from President Joe Biden’s Inflation Reduction Act.
In 2023, the IRS launched a new initiative to pursue high-income, high-wealth individuals who have failed to pay recognized tax debt. The initiative concentrated on taxpayers with more than $1 million in income and more than $250,000 in recognized tax debt.
“President Biden’s Inflation Reduction Act is increasing tax fairness and ensuring that all wealthy taxpayers pay the taxes they owe, just like working families do,” U.S. Secretary of the Treasury Janet Yellen said. “A new initiative to collect overdue taxes from a small group of wealthy taxpayers is already a major success, yielding more than $1 billion in revenue so far.”
Last year, the IRS announced that it had collected $38 million from more than 175 high-income, high-wealth individuals. It expanded this effort last fall to 1,600 additional high-income, high-wealth individuals. The IRS has assigned more than 1,500 of these 1,600 cases to senior employees, with more than $1 billion collected to date.
Prior to the Inflation Reduction Act, budget cuts prevented the IRS from keeping pace with increasing complexity and ensuring that wealthy taxpayers, large corporations, and complex partnerships pay taxes owed under current law.
The effort to pursue high-income, high-wealth individuals who have failed to pay past-due tax debt is one of several initiatives the IRS has launched to improve tax fairness and reduce the deficit.
In the past two years, the IRS has launched:
- A new initiative to crack down on abuse of corporate jets for personal travel.
- A campaign to collect taxes owed by 125,000 high-income, high-wealth earners who have not filed taxes in years.
- Audits of 76 of the most significant partnerships with average assets of $10 billion that represent a cross-section of industries, including hedge funds, real estate investment partnerships, publicly traded partnerships, and large law firms.
- Audits of the 60 largest corporate taxpayers, with average assets of $24 billion.
- And a new regulatory initiative to close a major tax loophole exploited by large, complex partnerships that could raise more than $50 billion in revenue over 10 years.
These initiatives will enhance tax fairness and reduce the deficit by narrowing the gap between taxes owed and taxes paid.
An analysis by the Treasury revealed that the investments made in high-end enforcement, technology, and data will result in $851 billion in additional revenue over the next decade.
Treasury added that it is committed to not increasing audit rates relative to current levels for Americans making less than $400,000 a year.