IRS touts ‘major milestone’ of collecting $1B from wealthy taxpayers

The IRS announced Thursday it has collected more than $1 billion of tax debt from wealthy taxpayers this year in a major milestone an attempt to sway public opinion about the department as Republican legislators fight to cut funding.

The agency first announced plans in September to increase its scrutiny of those making more than $1 million annually with upwards of $250,000 in debt. 

The $1 billion benchmark is the departments attempt to prove that it is making good use of the nearly $80 billion in funding from Bidens 2022 Inflation Reduction Act.

The IRS has shown that it can successfully launch strategic new initiatives and achieve the greatest return on investment, Treasury Secretary Janet Yellen said.

The Department of Treasury proposed a rule in June that would prohibit businesses or individuals from shifting assets to avoid paying more taxes.

The department also announced a crackdown on businesses wrongfully deducting personal flights on corporate jets and a group of millionaires who owe hundreds of millions in past due taxes.

These moves are likely attempts to boost public opinion ahead of potential Republican wins in the White House and Congress that would likely lead to funding cuts. Republicans often argue increased IRS funding — and thus, taxpayer scrutiny — will hurt middle-class taxpayers and small business owners.

The IRS and Treasury Department said in February if the funding remains, the agencies could generate up to $851 billion through 2034.

IRS Commissioner Danny Werfel said the IRS did not have the funding to pursue high-income tax evaders before the 2022 boost.

The difference is really like night and day, he said.

Audit rates dropped significantly over the past decade from 7.2% in 2011 to 0.7% in 2019, according to the IRS. 

But the whopping 2022 tax package passed by Senate Dems has faced opposition from the right.

House Republicans built an IRS funding reduction into the budget cut package passed by Congress last summer, including a deal to reallocate $20 billion from the IRS over the next two years to other departments.

And the House Republicans fiscal 2025 proposal includes further cuts to the IRS.

Despite a publicized clampdown on high-income individuals evading taxes, the IRS still largely audits non-high-income parties.

Nearly two-thirds of audits initiated in 2023 were on those making less than $200,000, said Demian Brady, vice president of research at the National Taxpayers Union Foundation.