IRS crackdown on millionaire tax cheats nets more than $1 billion in revenue

The U.S. Department of the Treasury and the IRS announced that a yearlong effort under the Biden administration to crack down on delinquent rich taxpayers has reached a “major milestone,” with more than $1 billion collected as a result of the campaign.

This large sum in tax debt from high-income individuals is a result of the tax agency’s $60 billion modernization initiative to improve customer service and catch rich tax evaders, the New York Times reported.

This is a big win for the Biden administration, which sought to increase funds for IRS tax enforcement over the objections of congressional Republicans, who slashed $20 billion from the proposed effort. This ignited the administration’s zeal to demonstrate that the funds are being used responsibly to bring in additional tax revenue that was going uncollected.

“The IRS has collected $1 billion from millionaires and shown that it can successfully launch strategic new initiatives and achieve the greatest return on investment,” Treasury Secretary Janet Yellen told reporters during a press call, CNBC reported.

About 1,600 taxpayers with incomes over $1 million who owed over $250,000 in tax debt were the primary targets.

“Efforts to increase tax fairness and bring in revenue from high-end taxpayers who have not paid what they owe are already paying off to the American people,” Yellen told reporters, the New York Times reported.

The Inflation Reduction Act, enacted in August 2022, is what contained the increased IRS funding that helped the agency expand. If the funding remains as is, the IRS investment in more enforcement, technology and data could bring in up to $851 billion by 2034, the agency estimated in February, CNBC reported.

IRS Commissioner Daniel Werfel told reporters that in the past the agency did not have enough funding to pursue high-income earners despite knowing they owed money. But with the larger enforcement staff, wealthy taxpayers who owe money were tracked down, sent letters, and in some cases threatened with additional penalties until they complied.

Werfel said rich taxpayers perhaps didn’t think the IRS had the bandwidth to come after them.

“Our message for these taxpayers is that now that we are resourced, we can do the job of ensuring that they pay,” he said, per the Times.

So far the IRS has spent $5.7 billion, or just 10 percent, of its IRA funding, according to an inspector general's report.