Article Summary –
The Internal Revenue Service (IRS), leveraging funding from the Inflation Reduction Act, has collected over $1 billion from high-wealth taxpayers with past-due taxes, focusing on 1,600 individuals with incomes exceeding $1 million annually and tax debts over $250,000. The additional resources have enabled the IRS to intensify its enforcement efforts, including pursuing high-income non-filers, complex partnerships, large corporations, and improper use of business aircraft, addressing areas previously neglected due to budget constraints. These actions reflect a broader initiative to enhance tax compliance and ensure fairness in the tax system by ensuring that taxpayers, particularly high-income ones, meet their legal tax obligations.
In efforts under the Inflation Reduction Act, the IRS announced surpassing the $1 billion mark in collections from high-wealth taxpayers with overdue taxes. Targeting 1,600 individuals with incomes over $1 million annually and tax debts above $250,000, the IRS’s intensified efforts have generated $1 billion since last fall.
“This collection activity marks a milestone in improving compliance and ensuring tax system fairness,” said IRS Commissioner Danny Werfel. “Years of funding declines hindered our ability to collect owed taxes, but Inflation Reduction Act funding is reversing this trend, enabling us to pursue wealthy tax evaders.”
Werfel highlighted that Inflation Reduction Act resources assist in various areas, including enhancing taxpayer service during the 2024 filing season and expanding enforcement on complex partnerships, large corporations, and high-income individuals.
Before the Inflation Reduction Act, a decade of budget cuts prevented the IRS from addressing sophisticated tax evasion tactics used by wealthy taxpayers. The IRS is now closing this gap with renewed efforts.
The IRS has assigned 1,500 cases to revenue officers, collecting $1 billion from over 1,200 individuals, with expectations for more in the coming months.
IRS Targets High-Wealth Non-Filers and Complex Partnerships
Earlier this year, the IRS launched a new initiative targeting high-income non-filers, involving over 125,000 instances since 2017. The initiative includes more than 25,000 people with incomes over $1 million and 100,000 with incomes between $400,000 and $1 million.
Other renewed compliance efforts include:
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- Abusive partnerships: The IRS announced steps to combat abusive partnership transactions used by wealthy taxpayers to evade taxes.
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- Large corporations and partnerships: Efforts include opening examinations of 76 large U.S. partnerships and expanding the large corporate compliance (LCC) program.
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- Aircraft use: The IRS announced plans to audit personal use of business aircraft, focusing on usage by large corporations, partnerships, and high-income taxpayers.
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