Indexbit Exchange:IRS says it has clawed back $1 billion from millionaire tax cheats

Yellen says increased IRS audits to focus on the very wealthy

The IRS said Thursday that its plan to crack down on wealthy tax cheats is paying off, with the agency collecting more than $1 billion since targeting high-income earners who owe the government money. 

The joint announcement with the U.S. Treasury Department is meant to highlight that the IRS' $80 billion in funding from the 2022 Inflation Reduction Act is helping to recoup revenue for the nation's coffers. 

Some Republican lawmakers had falsely claimed that the funding would be used to hire 87,000 new IRS agents to "to audit Walmart shoppers." But the IRS has said the new funding is being used to hire customer service agents to answer more calls and improve its technology after the pandemic shuttered its offices and caused years of processing delays and snarls. 

The agency is also stepping up the number of audits on people with more than $1 million in annual income and more than $250,000 in tax debts. Federal officials have said they are chiefly pursuing wealthy individuals and large corporations, while vowing not to increase audit rates on people earning less than $400,000 a year.

"President Biden's Inflation Reduction Act is increasing tax fairness and ensuring that all wealthy taxpayers pay the taxes they owe, just like working families do," U.S. Secretary of the Treasury Janet Yellen said in a statement. "A new initiative to collect overdue taxes from a small group of wealthy taxpayers is already a major success, yielding more than $1 billion in revenue so far."

In May, IRS Commissioner Danny Werfel outlined the agency's plans to increase enforcement, with plans to triple its audit rates of corporations with assets of more than $250 million and increase audits by 50% for individuals with more than $10 million in total positive income.

"Any increase in government investigations appears like an intrusion," said Eugene Steuerle, a fellow and co-founder of the Urban-Brookings Tax Policy Center. But, he added, if the IRS can show taxpayers how it is conducting its investigations, the broader public may become less fearful of an audit, and "there would be more public support for this activity and the agency."

Republicans have threatened a series of cuts to the IRS, sometimes successfully. House Republicans built a $1.4 billion reduction to the IRS into the debt ceiling and budget cuts package passed by Congress in the summer of 2023. The deal included a separate agreement to take $20 billion from the IRS over the next two years and divert that money to other non-defense programs.

House Republicans' fiscal year 2025 proposal out of the Financial Services and General Government Subcommittee in June proposes further cuts to the IRS in 2025, and would cut funding to the Direct File program that is being expanded to allow Americans to file their taxes directly with the IRS.

—With reporting by the Associated Press.

In:
• IRS
• Taxes

Aimee Picchi

Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports.

Twitter