The IRS(Internal Revenue Service) has announced that it has recovered $1.3 billion from high-income tax evaders since last fall, thanks to increased enforcement funded by President Joe Biden’s 2022 Inflation Reduction Act.
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| Photographer: Luke Sharrett/Bloomberg via Getty Images |
President Biden signed the Inflation Reduction Act into law in 2022, which included provisions for increased funding for the IRS to enhance tax enforcement and customer service.
Treasury Secretary Janet Yellen and IRS Commissioner Danny Werfel highlighted this achievement during a visit to an IRS campus in Austin, Texas. Yellen said that in 2019, the top 1% of wealthy Americans owed over 20% of unpaid taxes, placing a heavier burden on ordinary taxpayers. “To fix this, we’ve channeled IRS funding toward significant investments to combat tax evasion,” she said.
In 2023 and 2024, the IRS focused on high-income individuals with over $1 million in income and more than $250,000 in unpaid taxes. Since launching these initiatives, nearly 80% of the 1,600 millionaires targeted have made payments, totaling over $1.1 billion recovered.
Additionally, in the first six months of a new initiative starting in February 2024, the IRS collected $172 million from 21,000 wealthy taxpayers who had not filed returns since 2017. Despite this progress, Republicans have criticized the funding for the IRS, suggesting it would lead to unnecessary expansions.
Trump Criticizes IRS Funding for Potential Increased Audits
Donald Trump’s presidential campaign has criticized the IRS funding, alleging it would lead to the hiring of 87,000 new agents, with the campaign labeling this as an attack on ordinary Americans. However, the IRS has clarified that the funding is aimed at improving customer service and increasing audits for high-income individuals, not expanding enforcement against average taxpayers.
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| Donald Trump’s presidential campaign has criticized the IRS funding, pic .Julia Nikhinson / AP file |
The IRS has also introduced the Direct File program this year, allowing people with simple W-2 forms to submit returns directly, which has already resulted in over $90 million in refunds. This program, initially available in 12 states for the 2024 tax season, will expand to nine more states in 2025.
Treasury Secretary Janet Yellen noted, "The IRS is pursuing 125,000 wealthy taxpayers who haven't filed taxes in years." She pointed out that during 2010 to 2018, the audit rate for millionaires fell by 80%, shifting the focus to audits of lower-income taxpayers.
Yellen added that the IRS has seen positive results from its efforts, with 21,000 taxpayers recently filing returns and paying $172 million in taxes. The IRS aims to recover further funds from the remaining 104,000 individuals who have yet to file. The agency is prepared to use its enforcement authority to address these cases.