IRS’s Aggressive Approach Collects $38 Million from High-Income Tax Delinquents

The Internal Revenue Service (IRS) is highlighting its newfound ability to conduct rigorous audits on high-income tax evaders, aiming to secure continuous funding and prevent budget cuts proposed by Republicans who seek to weaken the agency.

In recent months, the IRS successfully collected $38 million in overdue taxes from over 175 affluent taxpayers. Notable cases include an individual who used funds owed to the government to purchase luxury vehicles such as a Maserati and a Bentley. Additionally, approximately 100 high-income individuals attempted to exploit tax benefits in Puerto Rico without meeting specific tax requirements, many of which are now expected to face criminal investigations.

Newly appointed IRS Commissioner Daniel Werfel, who has been on the job for just four months, expressed the significance of these recoveries, stating, “It just demonstrates the substantial amount of delinquent taxes out there, and there are still numerous cases for us to tackle. The opportunities are substantial.”

The IRS did not disclose figures for a comparative analysis of the high-dollar tax collections in relation to previous years. Commissioner Werfel credited the enhanced ability to identify tax delinquents to the resources provided by the Inflation Reduction Act, passed by Democrats in August of the previous year.

Despite the potential cutbacks, the IRS aims to justify the value of the Inflation Reduction Act funding for taxpayers as the appropriations season draws near. The agency also seeks to demonstrate the impact of its intensified efforts to audit high-income taxpayers. Last summer, Treasury Secretary Janet Yellen instructed IRS leadership to refrain from increasing audit rates for individuals earning less than $400,000 annually, directing their focus towards high-income taxpayers.

During a press call, Commissioner Werfel highlighted the IRS’s accomplishments, including answering three million more phone calls compared to the previous filing season, reducing wait times to three minutes from 28, and eliminating the backlog of error-free 2022 tax returns. The agency plans to open additional taxpayer assistance centers and organize events to aid individuals residing far from their in-person offices.

Acknowledging the need for further progress, Werfel acknowledged, “While some taxpayers still experience frustration and others witness significant improvements, it is evident that we have more work to do.”

The IRS’s enforcement staff has diminished by approximately one-third since 2010, and the agency has been grappling with outdated technology, which it is gradually automating.

In April, the agency released a report detailing how it intends to allocate the funds provided by the Inflation Reduction Act, which includes the modernization of paper-based systems and the prompt handling of taxpayers’ phone inquiries.

Among its more ambitious plans is the exploration of a government-operated electronic free-file tax return system, currently undergoing a pilot program.

The proposal of additional funding for the agency has been a subject of political controversy since 2013 when the IRS, during the Obama administration, faced criticism for scrutinizing tax-exempt status applications from political groups. A report by the Treasury Department Inspector General revealed that both conservative and liberal organizations were subjected to scrutiny.

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