The Internal Revenue Service (IRS), in partnership with the U.S. Treasury Department, has successfully recouped $1.3 billion in unpaid taxes from affluent Americans dodging their financial responsibilities. This enforcement uptick is the direct result of the 2022 Inflation Reduction Act, reinforcing the IRS's capabilities to tackle tax evasion issues head-on, especially among high earners. The Treasury states that this push stems from a troubling discrepancy: in 2019, the richest one percent of Americans were responsible for over a fifth of the nation's uncollected taxes.
On a recent visit to an IRS campus in Austin, Texas, Treasury Secretary Janet Yellen elaborated on the consequences of unchecked tax evasion. "For too long, this hadn't been happening," Yellen explained, pointing out the decreased rate of millionaire audits by 80% from 2010 to 2018. Republicans, however, have signaled their intentions to slash IRS funding, should they regain control of the White House and Congress, indicating potential budgetary challenges ahead for the agency, as reported by AP News.
This crackdown has not been without contention, a CBS News article mentioned that Republican lawmakers mischaracterized the funding as an initiative to "to audit Walmart shoppers," a claim detached from the IRS's stated objectives. Instead, the IRS has communicated its intention to leverage this funding to enhance customer service and intensify audits on the wealthy, specifically those with incomes exceeding $1 million and tax debts above $250,000.
Moreover, the IRS has directed its enforcement efforts towards 125,000 high earners who had long eschewed filing their tax returns. Approximately 21,000 of these taxpayers have since complied, amassing $172 million in recovered taxes. "Since the crackdown roughly 80% of 1,600 millionaires with overdue taxes have paid up, providing an additional $1.1 billion in taxes," the Treasury detailed, reflecting the effectiveness of the IRS's assertive approach. While this represents significant progress, securing taxes from the remaining non-compliant individuals continues to be a priority for the agency, as reported by CBS News.
In addition to enhanced enforcement, the IRS has undertaken modernization initiatives such as Direct File, a program permitting individuals with straightforward W-2 forms to file directly with the IRS. This program claimed over $90 million in refunds for users earlier this year and is expanding its reach across the United States. Looking forward, as more states join this initiative, the IRS positions itself not only as a regulatory body but also as a facilitator for Americans navigating their tax obligations.
