adminThe IRS says its tougher tax enforcement is already paying off and the agency is making more high-end tax cheats pay up.
A month after announcing it would crack down on 1,600 millionaires who were far behind on their taxes, the Internal Revenue Service said Friday it has collected $122 million in 100 of these cases.
That’s on top of $38 million in back taxes the IRS has already collected from 175 other millionaires. It brings the recent rake-in of back taxes from wealthy households to $160 million, IRS Commissioner Danny Werfel said.
“The funds that we’ve collected should give you a fairly good idea of how much money is on the table for us,” Werfel told reporters, highlighting how the IRS is using money from the Inflation Reduction Act.
The tax and climate package enacted last summer earmarked billions for the IRS to overhaul its operations, improve customer service and ramp up enforcement against the wealthiest taxpayers and major businesses.
From the archives (April 2023): Treasury Department hints at how IRS will spend $80 billion in new funding
And (August 2023): IRS says it’s catching more wealthy tax cheats and cutting phone wait times
Also see (August 2022): Fact check: No, the IRS is not hiring an 87,000-strong military force with funds from the Inflation Reduction Act
In some cases, the recouped money comes from restitution or guilty pleas in criminal cases, the IRS and Treasury Department said Friday. That includes a $15 million restitution order for a person who falsely claimed as deductible business expenses the costs involved in building a mansion replete with tennis, basketball and bocce courts.
Another case involved a person who skimmed more than $670,000 from a business by filing a false tax return. The individual allegedly spent $502,000 on gambling, the IRS said.
There was a $688 billion gap between the taxes owed and the taxes actually paid during tax year 2021, according to recent IRS estimates.
IRS officials also have their sights on corporate tax money.
Starting next year, the agency is initiating 60 audits of major corporations, Werfel said. These businesses have an average $24 billion in assets and are averaging $526 million in yearly taxable income, he noted.
Starting next month, the IRS also is going to send out approximately 150 alerts to U.S.-based subsidiaries of foreign companies. A concern is that these subsidiaries are not reporting the full amount of income they generate stateside — which is subject to taxation in the U.S.
The alerts to subsidiaries are meant “to remind them of their U.S. tax obligations and to incentivize taxpayer self-correction,” Werfel said.
That’s on top of the IRS announcement last month that it was planning 75 audits of large partnerships, including big law firms and hedge funds.
Passed last summer, with Democrats in control of both the House and the Senate, the Inflation Reduction Act authorized an additional $80 billion for the IRS over a decade. The sum earmarked for the IRS decreased to $60 billion after White House debt-ceiling negotiations in the spring with Republicans.
Werfel’s update comes while a prospective government shutdown looms next month and the role of speaker for the House of Representatives is vacant. “Our challenges are made even more stark by ongoing budget uncertainty,” the IRS commissioner said.
Read on:
The IRS is auditing the rich. Can you fly under the radar if you’re not wealthy?
Make less than $400,000? Don’t worry about an IRS audit. Here’s why.
Read the full article here
