The Internal Revenue Service (IRS) announced that it collected some $360 million from tax-delinquent millionaires, coming after the federal agency collected about $122 million from wealthy Americans in October.
Separately, the agency said that it is increasing its efforts to target Americans who make more than $1 million in income yearly and have more than $250,000 in tax debt, according to a news release.
Officials from the IRS told reporters Thursday to give updates on how the agency has used a portion of the tens of billions of dollars allocated to the agency through the Democrats’ Inflation Reduction Act, signed into law in August 2022.
“The IRS continues to increase scrutiny on high-income taxpayers as we work to reverse the historic low audit rates and limited focus that the wealthiest individuals and organizations faced in the years that predated the Inflation Reduction Act,” IRS Commissioner Danny Werfel said in a news release on Friday. “We are adding staff and technology to ensure that the taxpayers with the highest income, including partnerships, large corporations and millionaires and billionaires, pay what is legally owed under federal law.”
His statement added that the “additional resources the IRS has received is making a difference for taxpayers, and we plan to build on these improvements in the months ahead.”
‘Dozens of Revenue Officers’
In the news release, the IRS said that it has “ramped up” its efforts to go after “high-income” and “high-wealth” individuals who haven’t “filed their taxes or failed to pay recognized tax debt, with dozens of revenue officers focused on these high-end collection cases.” It noted that the agency has collected $38 million from more than 175 high-income earners so far.
The agency said it will put “increased focus” on making sure that Self-Employment Contributions Act taxes are being “properly reported” and paid by “wealthy individual partners” who have “inappropriately claimed to qualify as ‘limited partners’ in state law limited partnerships,” said the news release.
“In contrast to wage earners whose employment taxes are deducted from their paychecks, self-employed individuals are required to report and pay their SECA taxes on their federal income returns,” it said. “The IRS efforts to date include over 80 audits of wealthy individuals.”
Meanwhile, the IRS announced it would “ramp up audits” of about 75 partnerships using artificial intelligence to examine “some of the largest and most complex partnership returns in the filing population.”
“As of December, the IRS had open examinations of 76 of the largest partnerships in the United States that represent a cross-section of industries including hedge funds, real estate investment partnerships, publicly traded partnerships, large law firms, and other industries,” it said. “On average, these partnerships each have more than $10 billion in assets.
Budget Cuts
It comes as the IRS braces for a more severe round of funding cuts.
IRS Commissioner Daniel Werfel said Thursday that “the impact of the rescission that’s being discussed as part of the current budget will not impact our efforts until the later years.”
He said the agency would still spend its now-$60 billion allocation over the next 10 years and spread the need for more funding into later years.
“Our intent is to spend the money to have maximum impact in helping taxpayers,” he said, “to have maximum impact now and in the immediate future.”
“My hope is that as we demonstrate the positive impact that [Inflation Reduction Act] funding is having for all taxpayers, that there will be a need and a desire amongst policymakers at that time to restore IRS funding so that we can continue the momentum that’s having a very positive impact,” Mr. Werfel told reporters.
As of December, the IRS says it opened 76 examinations into the largest partnerships in the United States, including hedge funds, real estate investment partnerships, and large law firms.
“It’s clear the Inflation Reduction Act funding is making a difference for taxpayers,” Mr. Werfel said. “For progress to continue, we must maintain a reliable, consistent annual appropriations for our agency.”
The 2024 tax season begins on Jan. 29, the IRS recently said.
Collection notices for some individuals started going out in early January, the agency previously announced. It came after a pandemic-related pause in the letters.
“These notices and letters were previously paused due to the pandemic and high inventories at the IRS but will gradually resume during the next several months,” said a release from the agency. “Current tax year 2022 individual and third quarter 2023 business taxpayers began receiving automated collection notices this fall as the IRS took steps to return to business as usual.”
The Associated Press contributed to this report.
From The Epoch Times