Adrian Johnson
TLDR:
IRS collected over $1 billion in tax debts from millionaires within a year, thanks to an initiative targeting delinquent taxpayers with high incomes. The initiative, launched in September 2024, involved reaching out to 1,600 taxpayers who owed over $250,000 in taxes.
Key Elements:
– IRS collected $1 billion from millionaires in less than a year through a targeted initiative
– Increase in funding, including funds from the Inflation Reduction Act, enabled the IRS to tackle delinquent taxes from high-income taxpayers effectively
An initiative to collect tax debts from millionaires has brought in over $1 billion in less than a year, the Internal Revenue Service and the Treasury Department announced Thursday. Launched in September 2024, the effort involved dozens of IRS employees reaching out to 1,600 taxpayers who had more than $1 million in income and owed more than $250,000 in taxes. “This initiative has been a huge success,” Treasury Secretary Janet Yellen told reporters on a press call. “The IRS has collected $1 billion from millionaires and shown that it can successfully launch new strategic initiatives and get a significant return on investment.” Funding from the IRA was key to freeing up staff to identify the cases and then do the necessary follow-up. IRS Commissioner Danny Werfel testifying before the Senate Finance Committee “Too often during the past decade, the IRS didn’t have the resources to pursue high-income taxpayers to follow up with these people — even though their tax bill wasn’t in dispute,” said Werfel. “It takes time and effort to follow up, and the IRS was stretched too thin to pursue all these cases.” “One of the root causes is the implication that we don’t have the ability to do our job,” he continued. “I hope that that notion will start to dissipate and disappear among these taxpayers.” In response to a question about recent Government Accountability Office and Treasury Inspector General for Tax Administration reports that noted a relatively high percentage of “zero-change audits” — those that yield no extra revenue — Werfel said that percentage should drop as the IRS invests in new resources such as data analysis, new subject matter experts and so on. “We want to eliminate zero-balance-due audits,” he said. “There’s a combination of steps to take to eliminate zero-change audits, because the way income is shielded inappropriately has evolved. That’s why we need subject matter expertise and new ways of doing data science, and we need more people, because these are voluminous and complex returns. If we send in a team that’s too small to absorb the complexity of the financial environment of that business, we’re going to miss things.” Training revenue officers is critical, but the IRS also needs other types of experts, according to Werfel. Behavioral scientists, for instance, can help the agency write better letters aimed at taxpayers and make notices clearer and easier to understand, thus improving overall response rates. He also pointed out that the agency has been bringing on more accountants. “We’ve had significant success as we’ve ramped up our hiring of accounting skills inside the IRS, so as we’re calculating the tax due and the penalties and interest, it’s supported by a robust accounting skill set,” he said. The cost of all that extra expertise, Werfel was quick to note, is far outweighed by the extra revenue they help bring in. “The IRS is a positive return on investment,” he said. “When we hire an accountant or a revenue officer or a behavioral science expert, we recover far more than we pay them.”
