The US Department of the Treasury and Internal Revenue Service (IRS) announced this week that a new initiative to collect past-due tax debt from high-income, high-wealth individuals has reached a significant milestone, recovering more than $1 billion. This initiative, enabled by resources from President Biden’s Inflation Reduction Act, aims to enhance tax fairness.
Launched in 2023, the IRS initiative targets high-income individuals with more than $1 million in income and over $250,000 in recognized tax debt. Senior IRS employees have been assigned to these cases, resulting in substantial collections.
Initially, the IRS collected $38 million from more than 175 high-income individuals. The effort was expanded last fall to include 1,600 additional individuals, with over 1,500 cases assigned to senior employees, leading to the current $1 billion recovery.
Before the Inflation Reduction Act, over a decade of budget cuts hindered the IRS’s ability to keep up with increasing tax complexities, preventing the agency from ensuring that wealthy taxpayers, large corporations, and complex partnerships pay taxes owed under current law. The effort to pursue high-income individuals with 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 efforts to crack down on the abuse of corporate jets for personal travel, collect taxes from 125,000 high-income earners who have not filed taxes in years, audit 76 of the largest partnerships with average assets of $10 billion, audit the 60 largest corporate taxpayers with average assets of $24 billion, and close a tax loophole exploited by large partnerships, potentially raising more than $50 billion in revenue over 10 years.
These initiatives are projected to narrow the gap between taxes owed and taxes paid, reducing the deficit. According to new Treasury and IRS analysis, continued investments in high-end enforcement, technology, and data could generate $851 billion in additional revenue over the next decade if the Inflation Reduction Act’s provisions are sustained as proposed by President Biden. These efforts align with Secretary Yellen’s commitment not to increase audit rates for Americans making less than $400,000 a year.
