IRS Secures $1 Billion in Back Taxes from Wealthy US Taxpayers

The IRS announced on Thursday that it has successfully recovered $1 billion in overdue taxes from high-income individuals, marking a significant milestone that highlights the agency’s efforts to utilize funds from the Biden administration’s climate, health care, and tax legislation enacted in 2022.

This public announcement comes as IRS officials recognize the looming threat of substantial budget cuts if Republicans gain control of the White House and Congress. By showcasing their achievements, the IRS hopes to foster a more positive public perception and demonstrate their effectiveness.

In this vein, the IRS launched several initiatives last year targeting high-income earners who have failed to settle their tax debts. The campaign specifically focuses on those with incomes exceeding $1 million and tax debts over $250,000.

“President Biden’s Inflation Reduction Act is enhancing tax fairness, ensuring that wealthy taxpayers pay their dues, just like working families,” said Treasury Secretary Janet Yellen in a statement.

In June, the Treasury proposed new rules and guidance aimed at curbing “partnership basis shifting,” a tactic used to avoid taxes by moving assets among related entities. This measure could generate over $50 billion in revenue over the next decade.

Other recent IRS initiatives include cracking down on improper personal flight deductions on corporate jets and collecting back taxes from wealthy delinquents.

Eugene Steuerle, a co-founder of the Urban-Brookings Tax Policy Center, noted that demonstrating the positive impact of IRS efforts without affecting average taxpayers could bolster public support for the agency.

“Any increase in government investigations might seem intrusive,” Steuerle said, adding that transparency about IRS procedures could alleviate fears of audits among the general public.

Republicans have periodically succeeded in cutting IRS funding. For example, the debt ceiling and budget cuts package passed in the summer of 2023 included a $1.4 billion reduction for the IRS, with a further agreement to redirect $20 billion from the IRS budget to other non-defense programs over the next two years.

The House Republicans’ fiscal year 2025 proposal suggests additional IRS cuts, including funding for the expansion of the Direct File program, which allows Americans to file taxes directly with the IRS.

Demian Brady, vice president of research for the National Taxpayers Union Foundation, pointed out that the IRS continues to audit non-wealthy partnerships. “It should also be noted that nearly two-thirds of audits initiated in 2023 were on those making less than $200,000,” Brady said.