Internal Revenue Service Commissioner Danny Werfel testifies before the House Appropriations Committee on Capitol Hill in Washington, May 7, 2024.
Kevin Dickey | Getty Images News | Getty Images
The U.S. Treasury Department and the Internal Revenue Service announced Thursday that they recovered more than $1 billion in taxes from high-income individuals last year, marking what they called a “major milestone.”
Armed with tens of billions of dollars in new funding, the IRS announced in September plans to expand scrutiny of people who earn more than $1 million a year and have confirmed tax debts of more than $250,000.
“The IRS has raised $1 billion from millionaires, demonstrating that it can successfully launch strategic new initiatives and achieve maximum return on investment,” U.S. Treasury Secretary Janet Yellen told reporters at a news conference.
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The IRS estimated in February that its investments in law enforcement, technology and data could generate as much as $851 billion in revenue by 2034 if funding continues.
However, the infusion of IRS funding enacted through the Inflation Reduction Act of 2022 remains criticized, especially by congressional Republicans.
“Over the past decade, the IRS has not had the resources or personnel to pursue high earners that our compliance teams knew owed taxes,” IRS Commissioner Danny Wayfair said in a news release.
Wayfair said that due to budget constraints, the unpaid taxes collected from similar earners before the Inflation Reduction Act provided funding would be negligible. “The difference is really like night and day,” he said.
According to the IRS, in 2019, the most recent year available, the audit rate for taxpayers earning $1 million or more was 0.7%, compared with 7.2% in 2011.
The U.S. Government Accountability Office and the U.S. Treasury Department’s Inspector General for Tax Administration both recently conducted reviews of the IRS’s high-revenue audit process. While both agencies’ reports addressed their audit selection processes, the Treasury report specifically noted higher no-change rates in audits of certain high-income filers.
“Our goal has always been to eliminate the risk of a zero-balance due audit,” Wayfair said at a news conference on the agency’s report.
The latest announcement comes less than a month after the IRS and Treasury Department unveiled plans to close “significant tax loopholes” exploited by large, complex partnerships. The crackdown could raise $50 billion in tax revenue over the next 10 years, according to agencies.
