Millionaires who were behind on their taxes have already paid half-a-billion dollars to get current with the IRS as the agency ratchets up high-level tax compliance.
On Friday, the IRS unveiled new numbers on the amount of back taxes paid by millionaire households ever since a 2022 upgrade for tougher IRS enforcement on businesses and super-wealthy tax dodgers.
IRS officials said they’ve pulled in another $360 million from millionaire households with at least $250,000 in tax debts.
That follows an October IRS announcement that $160 million in delinquent taxes had been raked back from wealthy households.
That’s $520 million altogether — and a strong initial return on investment for a multibillion-dollar funding influx, according to IRS Commissioner Danny Werfel.
“We are seeing significant early indicators that our increased scrutiny … is having immediate impact,” Werfel told reporters Thursday. He also noted the IRS is pressing ahead with new audits on corporations and deep-pocketed partnerships.
There’s an uncertain future for a portion of the money tied to that tougher stance, though.
The Inflation Reduction Act of 2022 authorized $80 billion to the IRS over a decade. More than half the money was earmarked to revive flagging enforcement of corporations, partnerships and rich households.
Werfel and the Biden administration have pledged no increase on the audit rates for households making less than $400,000 a year.
But in a deal to lift the debt ceiling, the White House agreed with House Republican negotiators to redirect $20 billion elsewhere. Part of a new potential deal to avert a partial Jan. 19 government shutdown would speed up the pullback on that $20 billion.
A faster pullback on the $20 billion wouldn’t affect the IRS’s upgrades and high-level crackdown until later years in the decade, Werfel said.
But it’s money well spent on enforcement and better customer service, he said. “For this progress to continue, we must maintain a reliable, consistent annual appropriation for our agency, as well as keeping Inflation Reduction Act funding intact,” Werfel said Thursday.
There are funding questions for the long term, but also questions in need of answers much sooner.
Income tax-filing season starts on Jan. 29, and IRS funding would run out on Feb. 2 without a new spending deal. Though people will still be able to file their 2023 income-tax returns in the event of a lapse, Werfel noted that a government shutdown has never occurred during tax-filing season.
“Shutdowns are highly disruptive,” he said, later adding “It will increase the risk that we don’t have as smooth a filing season as we intend to have.”
