IRS, Treasury provide update on efforts to collect unpaid taxes from high-earners

U.S. Treasury Secretary Janet Yellen and Internal Revenue Service (IRS) Commissioner Danny Werfel highlighted some of the key milestones in their departments’ various initiatives, including collecting $1.1 billion in unpaid taxes from wealthy individuals

Yellen and Werfel, speaking last week at the IRS campus in Austin, provided an update on the agencies joint effort to collect taxes from 125,000 taxpayers making more than $400,000 in income who have not filed taxes since 2017.

Prior to the Inflation Reduction Act, the IRS non-filer program ran sporadically since 2016 due to severe budget and staff limitations that did not allow these cases to be pursued. However, with Inflation Reduction Act funding, the IRS now has the capacity to do this core tax administration work.

In the first six months of this initiative, nearly 21,000 of these wealthy taxpayers have filed, leading to $172 million in taxes being paid.

Then, in the fall of 2023, the IRS launched a new initiative using Inflation Reduction Act funding to pursue high-income, high-wealth individuals who have failed to pay recognized tax debt. The IRS was previously unable to collect from these individuals due to a lack of resources. But with the IRA funding, the work focused on taxpayers with more than $1 million in income and more than $250,000 in recognized tax debt.

So far, nearly 80 percent of these 1,600 millionaires with delinquent tax debt have now made a payment, leading to over $1.1 billion recovered. This is an additional $100 million just since July, when Treasury and IRS announced reaching the $1 billion milestone.

Yellen and Werfel also discussed other issues, including the Digital First Initiative. Thanks to Inflation Reduction Act resources, the IRS has launched more digital tools in the last two years than the previous 20 years, including:

• More than two dozen new features and enhancements to Individual and Tax Professional Online Account;
• The launch of Business Tax Account;
• The release of 30 digital mobile-adaptive forms;
• The ability for taxpayers to receive their refund status via a conversational hotline;
• A mobile-friendly web tool for Where’s My Refund; and
• Direct File, a new tool that allows taxpayers to file for free, directly with the IRS.

The enhanced online tools are designed to save taxpayers time and money, while also reducing phone calls, paper processes, and other burdens on IRS employees. Through the Digital First Initiative, the IRS is pursuing a vision where taxpayers can do all their transactions with the IRS digitally if they prefer.

Further, the IRS has updated its foundational technology. For 65 years, the IRS has relied on the same foundational technology for many of its critical systems, including the Individual Master File (IMF), which houses taxpayer data and feeds into key systems. However, the core technology has become a liability due to the diminishing pool of experts proficient in this legacy language.

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