The Internal Revenue Service (IRS) has announced that it has successfully collected over $1 billion in overdue taxes from millionaires since last fall. This achievement is attributed to increased enforcement efforts funded by the Inflation Reduction Act, which was passed by Democrats nearly two years ago.
The Biden administration is keen to showcase how the IRS is utilizing these funds to target wealthy tax evaders and enhance taxpayer services. On the other hand, Republicans have criticized this funding as wasteful spending and have attempted to reduce the 10-year investment outlined in the legislation.
Last autumn, the IRS initiated a campaign to recover unpaid taxes from affluent individuals. Approximately 1,600 taxpayers with incomes exceeding $1 million and tax debts surpassing $250,000 were identified. To date, the IRS has recouped over $1 billion from these individuals, with the initiative ongoing.
Prior to the Inflation Reduction Act, the IRS lacked the necessary staff and resources to pursue high-income earners who owed taxes, as stated by IRS Commissioner Danny Werfel. The agency's efforts to collect overdue taxes typically commence with a letter to the taxpayer's residence, providing an opportunity to settle the debt or contest the matter within a specified timeframe.
In recent years, the IRS has implemented various measures to combat tax evasion among the wealthy, including increased audits of affluent taxpayers, corporations, and large business partnerships. This has been made possible by hiring additional staff and utilizing artificial intelligence. The agency is also scrutinizing the personal use of corporate jets.
Furthermore, a portion of the funding from the Inflation Reduction Act is being allocated to modernize taxpayer services. Consequently, the IRS has been able to handle 1 million more calls this year compared to the previous tax season. Efforts to digitize the agency's extensive paper records, totaling 1 billion pieces, are also underway.
Earlier this year, the IRS introduced a pilot version of its own tax filing service, Direct File, enabling Americans to file their returns directly with the IRS for free. Over 140,000 individuals utilized the program successfully, and the IRS intends to expand it next year.
The Inflation Reduction Act, passed without Republican support, allocated approximately $80 billion to the IRS over a decade. However, Republicans have sought to reclaim some of this funding. In a compromise to address the debt ceiling and prevent a US default last year, Democrats agreed to rescind $20 billion of the Inflation Reduction Act funds.
In January, Democrats consented to an accelerated $20 billion cut in an effort to pass a full-year federal spending law promptly and avert a partial government shutdown.
