In a substantial effort to reinforce enforcement, the Internal Revenue Service (IRS) has successfully retrieved an additional $360 million in delinquent taxes from affluent individuals engaged in tax evasion.
This heightened collection activity is particularly noteworthy as the IRS faces the imminent challenge of potential budget cuts that could impede its capacity for future enforcement endeavors.
The Inflation Reduction Act, enacted in August 2022, has strengthened the Internal Revenue Service’s (IRS) intensified pursuit of high-income tax evaders.
This legislation allocated tens of billions of dollars to the agency, specifically earmarked for modernization and enforcement initiatives, including the pursuit of delinquent taxpayers.
Nevertheless, the continuity of this funding remains uncertain, given the impending budget cuts agreed upon by the White House and congressional Republicans last year, posing a potential threat to the IRS’s enforcement capabilities.
IRS Targets Tax Avoidance in 76 Major US Partnerships
The IRS has proactively targeted tax avoidance, initiating examinations into 76 of the largest partnerships in the United States, encompassing hedge funds, real estate investment partnerships, and prominent law firms.
This heightened focus on auditing affluent entities represents a notable departure from previous years, wherein high-income individuals and organizations experienced lower scrutiny and audit rates.
The intensified enforcement initiative has yielded substantial returns, as the IRS has successfully recovered over $520 million from approximately 1,600 households with annual incomes surpassing $1 million.
These households were identified for having outstanding tax liabilities exceeding $250,000. Notably, $160 million was collected by late October, with an additional $360 million obtained in subsequent months.
The recent enforcement outcomes of the IRS provide compelling evidence contradicting Republican assertions made during the passage of the Inflation Reduction Act.
Critics contended that the additional funding would disproportionately target middle-class households.
Contrary to these claims, the IRS’s efforts have been distinctly directed towards addressing the tax liabilities of the wealthiest individuals, a narrative reinforced by the substantial sums recovered from delinquent millionaires.