The IRS announced Friday that it has recovered some $1.3 billion from wealthy people by increasing its tax enforcement.
Two years ago, Democrats passed the Inflation Reduction Act, which turbocharged the IRS with funding that was supposed to give the agency more resources to audit high-income earners and identify tax cheats. Now, the tax collecting agency says those efforts are bearing fruit.
“These efforts matter,” said Treasury Secretary Janet Yellen in prepared remarks for a speech in Texas. “They are advancing fairness: It’s not right that everyday Americans pay taxes while struggling to make ends meet, but some of the wealthiest in this country have been able to evade payment.”
The IRS said that earlier this year it launched an initiative to go after 125,000 high-income and high-wealth taxpayers who haven’t filed taxes since 2017. The agency said the taxpayers it targeted earned more than $400,000, but never filed tax returns.
The agency said that because of the Inflation Reduction Act, it had the ability to pursue these taxpayers and claw back money.
“In the first six months of this initiative, nearly 21,000 of these wealthy taxpayers have filed, leading to $172 million in taxes being paid,” the IRS said in a news release.
In fall of last year, the IRS also used Inflation Reduction Act funding to launch an initiative to go after wealthy individuals who have failed to pay recognized tax debt — dozens of senior employees were assigned to these cases, according to the IRS. Those individuals were taxpayers with more than $1 million in income and more than $250,000 in recognized tax debt.
“Nearly 80% of these 1,600 millionaires with delinquent tax debt have now made a payment, leading to over $1.1 billion recovered,” the news release read. “This is an additional $100 million just since July, when Treasury and IRS announced reaching the $1 billion milestone.”
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Republicans opposed the influx of IRS funding, arguing it would drive up audits on the middle class. Democrats, meanwhile, argued that the funding would be used to close the tax gap by going after wealthy tax cheats and would be focused on those earning in excess of $400,000, offering a significant return on investment.
Republicans have sought to claw back some of the $80 billion in IRS funding and were fiercely against that provision in the legislation. They have already succeeded in reducing some of the funding.