The IRS put high-income tax dodgers on notice in February when it announced an initiative to go after wealthy non-filers. Now, the agency reports that it’s made “significant progress” — to the tune of $172 million.
On a regular basis folks need not worry: The Biden-Harris administration has a longstanding commitment to not raise taxes on individuals earning lower than $400,000, and officials say recent tax compliance work is not targeted at Americans under that threshold, either. With this latest effort to “crack down” on tax evasion, the IRS began to chase down about 125,000 individuals who hadn’t filed tax returns since 2017.
Of those cases, 25,000 had over $1 million in annual income, and the opposite 100,000 were earning over $400,000. The IRS says it was capable of discover these high-income non-filers based on tax forms from third parties, namely W-2s and 1099s.
On Friday, the IRS announced it collected that $172 million from 21,000 of those people, and a senior Treasury official suggested on a press call that is only the start of what might be closer to a $1 billion recovery project. Thus far, the tax payments have largely come from individuals who responded to initial IRS outreach informing them that they were on the agency’s radar for not filing tax returns.
The Inflation Reduction Act, signed in 2022, provided additional funds for the IRS to attempt to get high-income and high-wealth individuals to pay taxes they owe the federal government. Previously, the IRS said, it lacked the resources to pursue these taxpayers, and the “non-filer program ran sporadically since 2016 attributable to severe budget and staff limitations.”
“It’s not right that on a regular basis Americans pay taxes while struggling to make ends meet, but a number of the wealthiest on this country have been capable of evade payment,” Secretary of the Treasury Janet Yellen said at an event in Austin Friday.
The IRS’s crackdown on wealthy taxpayers stays controversial in Washington, as Republicans argue it’s a poor use of presidency resources. It could even grow to be an election issue within the tight race between Vice President Kamala Harris and former President Donald Trump.
“Harris was the tie-breaking vote for the Inflation Reduction Act within the Senate, which… led to a large expansion of the IRS with an extra $80 billion to rent 87,000 recent agents,” Brian Hughes, a Trump campaign adviser, told reporters Thursday. (That’s in line with a CNN report, which also notes that the variety of agents he cited is exaggerated.)
Yellen has lambasted those in Congress who need to cut IRS funding, saying Friday that will “make it easier for wealthy Americans and corporations to avoid paying what they owe while working Americans foot the bill.”
In any case, as officials tout the IRS’s progress find non-filers, they’re also talking up several related initiatives to get the rich to pay their justifiable share in taxes.
For years, Yellen said, the IRS has didn’t adequately audit millionaires — a problem the agency is attempting to correct. Officials also announced that an initiative to get well delinquent tax debt has from 1,600 wealthy individuals has led to the recovery of $1.1 billion, up from $1 billion as of the last update in July. In line with the IRS, these people all had over $1 million in annual income and over $250,000 in tax debt.
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