The IRS says it has clawed back more than $1 billion in unpaid taxes from millionaires who were skipping payment of undisputed tax bills — that is, they were skipping them until the agency started stiffening enforcement on rich households.
Tax collectors reached the money milestone less than a year after identifying 1,600 wealthy households that needed to pay tax debts worth at least $250,000 apiece, IRS and Treasury officials announced Thursday.
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This collection work is ongoing, and it’s one part of a tougher stance on rich taxpayers and businesses from a better-staffed IRS, they noted.
The Inflation Reduction Act of 2022 earmarked billions for the IRS to improve its operations, hire more staff and go after wealthy tax cheats. Since then, the agency has been spotlighting its plans to use the money and its early results.
Tax lawyers and accountants with rich clients are taking notice of an IRS that’s willing to push deeper, while the extra money for enforcement has become a flashpoint with Republicans in Congress.
Democrats applauded the IRS announcement, with U.S. Sen. Elizabeth Warren writing on X: “Democrats boosted IRS funding, and it’s already gotten back $1 BILLION from millionaire tax cheats. Republicans want to cut IRS funding again to protect their rich tax-dodging buddies — no way.”
IRS Commissioner Danny Werfel described the recouped $1 billion as a “staggering number” — especially compared with the “de minimis” amount of back taxes collected from wealthy taxpayers before the Inflation Reduction Act’s passage.
“Our increased work in this area means that past-due tax bills from high-end taxpayers are no longer being left on the table, like they were too often in the past,” he said.
Working these cases takes time and staff, Werfel added. The IRS now has approximately 90,000 full-time-equivalent workers, up from 79,000 employees in fiscal year 2022. The extra personnel makes a difference, especially when the IRS has to follow up on multiple requests to pay a tax bill, he said.
The pay-up requests to the delinquent millionaires started with IRS letters, which recipients sometimes ignored and sometimes questioned, before ultimately agreeing to pay. “If we are not following up, taxpayers will hold out,” Werfel noted. “We’ve learned that.”
More than 1,500 of the 1,600 delinquent cases have been assigned, and the effort should yield more money in the months ahead, Werfel added.
The $1 billion collected through the spring comes via payments from more than 1,200 taxpayers, the IRS said.
Broadly speaking, the IRS collected $104.1 billion in unpaid tax assessments in fiscal year 2023, according to its most recent statistics.
The agency set its sights on the 1,600 taxpayers with at least $1 million in income last September, following an initial $38 million collection in back taxes from a smaller batch of households with at least $1 million in income.
“This initiative has been a huge success,” Treasury Secretary Janet Yellen said. The $1 billion mark shows “the IRS can successfully launch strategic new initiatives and achieve the greatest return on investment.”
Though the back-tax payments are early wins for the IRS, the agency hopes it can pull in more unpaid tax money elsewhere as it steps up high-level enforcement. For example, it has reached out to more than 125,000 high-income households that have not submitted tax returns in years, telling them to hurry up and file already.
The IRS may have early estimates on collections from the unfiled tax returns by the fall, Werfel said.
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