Internal Revenue Service Commissioner Danny Werfel testifies before the House Appropriations Committee on Capitol Hill in Washington, May 7, 2024.
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The US Treasury Department and the IRS on Thursday announced what they called a “significant milestone” in collecting more than $1 billion in tax debt from high-income individuals over the past year.
With tens of billions in new funding, the IRS announced plans in September to expand its oversight of those making more than $1 million a year with recognized tax debts of more than $250,000.
“The IRS has collected $1 billion from billionaires and has shown that it can successfully launch new strategic initiatives and achieve the greatest return on investment,” Treasury Secretary Janet Yellen told reporters during a press call.
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If funding is maintained, IRS investments in enforcement, technology and data could generate as much as $851 billion through 2034, the agency estimated in February.
The IRS funding infusion, implemented through the Inflation Reduction Act of 2022, still has its critics, especially among congressional Republicans.
“For the past decade, the IRS has not had the resources or staff to pursue high-income individuals whose compliance teams know they owe taxes,” IRS Commissioner Danny Werfel said in a press call.
Werfel said the unpaid taxes collected on the same income could be ignored before the funding of the Inflation Reduction Act due to budget constraints. The difference is like 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 to 7.2% in 2011, according to the IRS.
The US Government Accountability Office and the US Treasury Inspector General for Tax Administration recently reviewed the IRS’s high-income audit process. While the two agencies’ reports detailed the audit selection process, the Treasury report specifically cited the unchanged rate among audits of high-income filers.
“Our goal has always been to eliminate disproportionate audit risk,” Werfel said in a press call about the agency’s report.
The latest announcement comes less than a month after the IRS and Treasury announced plans to close what they called a “major tax loophole” used by large and complex partnerships. The measure could raise $50 billion in tax revenue over the next 10 years, according to the agency.
