IRS collection from rich nonfilers exceeds $1.3 billion
Friday, September 06, 2024
The U.S. Treasury’s balance has grown recently, thanks to Internal Revenue Service’s success in collecting from high-wealth individuals who neglected to file tax returns.
Treasury Secretary Janet L. Yellen and IRS Commissioner Danny Werfel this morning announced that to date $1.3 billion has been recovered from wealthy nonfilers.
The new collection effort, kicked off in 2023 and led by dozens of senior employees, focused on the pursuit of, in federal officials words, “high-income, high-wealth individuals who have failed to pay recognized tax debt.”
Personal aside: That descriptive phrase in quotation marks is much more diplomatic than what I would have used. <cough>Tax cheats.<cough>.
Added IRS fund paying off: Yellen also noted that the initiative was made possible by the additional funding the IRS received under the Inflation Reduction Act. Before then, said Yellen, the IRS had not had the resources to pursue these wealthy non-filers.
“Between 2010 and 2018, the audit rate for millionaires fell by 80 percent,” Yellen told an audience gathered at the IRS campus in Austin, Texas. “And during the previous Administration, as audit rates on high-income taxpayers fell, the share of audits on taxpayers with incomes under $200,000 increased. In 2019, the top one percent of Americans was estimated to owe over one-fifth of unpaid taxes, leaving ordinary Americans to shoulder the burden.”
Using the new funds, Yellen said, the IRS made “significant investments to combat tax evasion.”
Those return on those investments continue to add up.
Topping $1.3 billion collected: Yellen said that after successfully collecting $38 million from more than 175 high-income, high-wealth individuals last year, the IRS expanded its effort last fall to around 1,600 additional high-income, high-wealth individuals.
“I am glad to share today that nearly 80 percent of 1,600 millionaires with delinquent tax debt have now paid, leading to over $1.1 billion recovered,” added Yellen.
“This is an additional $100 million since July, when we announced reaching the $1 billion milestone,” she said.
Werfel on IRS improvements: Werfel also addressed the group, focusing on how the new IRS funding is helping the agency do all its jobs.
The commissioner noted, as did Yellen, the symbolism of their tour of the Austin IRS campus. During the COVID-19 pandemic, the facility’s cafeteria didn’t serve food. Instead, it was filled with tax paperwork that piled up because the agency didn't have the resources to handle the backlog.
The Inflation Reduction Act money not only helped the IRS add resources to deal with backlogs, Werfel told the IRS Austin assembly that the added money is helping lay the foundation for continued transformation at the agency and improving taxpayer interaction.
“We have an historic opportunity to move beyond just basic service, and to build a 21st century tax agency to serve the American people in the manner they expect and at the level they deserve,” he said.
The IRS commissioner pointed to “significant progress in upgrading technology and taking long-overdue modernization steps.” He cited —
- Making all taxpayer interactions digital if individuals so choose;
- Disrupting tax scams and providing comprehensive victim support; and
- Protecting taxpayer data from unauthorized access and disclosure.
And in keeping with Yellen’s announcement, Werfel also addressed his agency’s overall tax collection efforts and goals.
"We will put in place increasingly accurate audit selection methods that hold accountable those taxpayers that use complex financial maneuvers to shield income while avoiding burdening those taxpayers who play by the rules, including lower income taxpayers,” said Werfel.
Let’s go to the videotape: You can hear all of Yellen’s and Werfel’s remarks, as well as those of others at the Austin gathering, via the Treasury Department’s YouTube recording. It’s also embedded below.
I was particularly pleased that the first user of Direct File, Austin IRS employee Dixie Warden, got to introduce the Treasury Secretary. That’s at around 16 minutes into the recording. Warden also commented on her historic filing experience and all the surprising attention that followed.
Tax Felon Friday: Yes, it’s that time of the week when I usually focus on some tax scofflaw.
However, instead of highlighting one tax criminal today, I’m using the Yellen and Werfel remarks here in Austin to remind people that they can avoid being on the wrong side of tax law by just fulfilling their annual filing obligation.
By filing your Form 1040 before the IRS, with its revived attention to and funding for audits, catches them, you’ll avoid the hassle of having to deal with the tax collector. You’ll also save yourself the penalty and interest charges that the agency will add to any tax owed when it has to come after the due tax.
Meanwhile, you can catch up on all sorts of tax miscreants by checking out the ol' blogs' special Tax Felon Friday page.
And if you want more tax crime posts, notably those that were published long before I gave them a special end-of-week feature, you can peruse, what else, the tax crimes category. You'll find this post at the top of that collection right now, so just scroll down for more.
You also might find these items of interest:
- IRS touts enhanced tax options for businesses with online accounts
- ERC claimants get second chance to disclose, and pay back, improper amounts
- Direct File 2025 Participating States page lets you know if your state has joined the IRS free, online tax preparation and electronic filing program.
Advertisements
🌟 Explore Prime for Young Adults 🌟
The text link above is an affiliate ad. If you click through and then buy a product, I receive a commission.
Comments