Millionaires who were overdue on their taxes have coughed up more than half a billion dollars since the Internal Revenue Service stepped up its enforcement of the tax code against the ultrawealthy, the IRS revealed on Friday.
Using new funding earmarked for the IRS to target wealthy and corporate tax cheats, the IRS since mid-2022 has collected more than $520 million from about 1,600 households with income of more than $1 million and that are known to have unpaid tax bills of more than $250,000.
By late October, the IRS crackdown had hauled in $160 million. The agency has recouped an additional $360 million from the delinquent millionaires in the months since.
“The IRS continues to increase scrutiny on high-income taxpayers as we work to reverse the historic low audit rates and limited focus that the wealthiest individuals and organizations faced in [previous] years,” IRS Commissioner Danny Werfel said in a statement. “The additional resources the IRS has received is making a difference.”
But the funding that has made it possible for the IRS to target wealthy tax dodgers is in jeopardy.
The money comes from the 2022 Inflation Reduction Act. Known as the Biden administration’s climate and infrastructure bill, the $369 billion law also set aside $78 billion over the next decade for the IRS to hire customer support staff for ordinary taxpayers and new auditors who would focus on the filings of the ultrarich.
Although the agency and the Biden administration promised not to target middle-class households, Republicans falsely portrayed the funding as a plan to sic thousands of revenue officers on the general public.
Last year, a deal between Biden and former House Speaker Kevin McCarthy (R-Calif.) to raise the debt ceiling slashed enforcement funding by $20 billion to $24.2 billion. Now, a new debt ceiling deal between Speaker Mike Johnson (R-La.) and Senate Majority Leader Chuck Schumer (D-N.Y.) reportedly speeds up those cuts.
Aside from millionaire tax holdouts, the agency is cracking down on a range of fishy corporate structures that ultrawealthy individuals, hedge funds, large law firms and multinational companies often deploy to avoid reporting taxable income and transactions.
By the end of last year, the agency said, it was scrutinizing more than 60 corporate taxpayers worth an average of roughly $24 billion, 180 foreign corporate subsidiaries and nearly 80 corporate partnerships with assets of more than $10 billion.
