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

by Lucas Garcia
5 comments
tax evasion

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.

Frequently Asked Questions (FAQs) about tax evasion

What is the IRS showcasing regarding high-income tax dodgers?

The IRS is showcasing its new capability to aggressively audit high-income tax dodgers, aiming to collect delinquent taxes and make the case for sustained funding while trying to avert budget cuts.

How much money did the IRS collect from high-income tax delinquents?

The IRS collected $38 million in delinquent taxes from more than 175 high-income taxpayers in the past few months.

What are some notable cases of tax evasion?

One individual used money owed to the government to purchase a Maserati and a Bentley. Additionally, around 100 high-income individuals attempted to exploit tax benefits in Puerto Rico without meeting certain tax requirements, leading to potential criminal investigations.

Is the IRS facing potential budget cuts?

Yes, House Republicans have included a $1.4 billion reduction to the IRS in the debt ceiling and budget cuts package. The White House has also agreed to divert $20 billion from the IRS over the next two years to other non-defense programs.

What actions has the IRS taken to improve its operations?

The IRS has increased its ability to identify tax delinquents through resources provided by the Inflation Reduction Act. They have also improved phone call response times, cleared the backlog of error-free tax returns, and are opening new taxpayer assistance centers.

How has the IRS’s enforcement staff and technology been affected?

The enforcement staff has decreased by about one-third since 2010, and the agency has been operating with outdated technology. However, they are gradually automating their systems to modernize operations.

Has the IRS faced controversy in the past?

Yes, in 2013, the IRS faced controversy for scrutinizing tax-exempt status applications from political groups. A report by the Treasury Department Inspector General revealed that both conservative and liberal groups were subjected to scrutiny.

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5 comments

TaxMaster2000 July 14, 2023 - 10:52 am

woah, some of those tax evaders were buying fancy cars like a Maserati and a Bentley with the money they owed the government! That’s just brazen. Glad the irs is cracking down on these high-income tax dodgers.

Reply
TaxPro2023 July 14, 2023 - 12:35 pm

it’s about time the irs stepped up their game and focused on auditing high-income taxpayers. the past few months have shown some success with collecting delinquent taxes. let’s hope they continue to make progress and bring more tax evaders to justice.

Reply
Jenny123 July 14, 2023 - 9:52 pm

irs is really going after those high-income tax dodgers, good for them! they collected a whoppin’ 38M in delinquent taxes from the rich folks. show ’em who’s boss, irs!

Reply
MoneyMatters101 July 15, 2023 - 6:51 am

it’s crazy to think how much money is out there in delinquent taxes. and there are still so many more cases for the irs to tackle. they need all the funding they can get to keep going after these tax evaders.

Reply
ConcernedCitizen July 15, 2023 - 7:29 am

it’s disappointing to hear that the irs is facing potential budget cuts. we need them to keep going after those high-income tax dodgers and collect the money that’s owed to the government. let’s hope they get the sustained funding they need.

Reply

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