IRS Takes Aim at 1,600 Millionaires in Massive Back Tax Collection Drive


The IRS has unveiled an ambitious plan to pursue 1,600 millionaires and 75 large business partnerships that collectively owe hundreds of millions of dollars in past due taxes. This crackdown on tax evasion comes as the IRS harnesses new resources, including artificial intelligence tools, to identify and hold accountable individuals and businesses that have been skirting their tax obligations.

IRS Commissioner Daniel Werfel announced this initiative, highlighting the agency’s determination to ensure that all taxpayers, including high-net-worth individuals and large businesses, fulfill their tax obligations promptly.  The move is seen as a response to mounting frustration among law-abiding taxpayers who observe wealthy filers avoiding their tax responsibilities. 

The targets of this new “compliance effort” are 1,600 millionaires who each owe at least $250,000 in back taxes and 75 large business partnerships with an average of $10 billion in assets. The IRS has embarked on a massive hiring effort and is utilizing advanced artificial intelligence research tools developed by IRS personnel and contractors to identify these tax delinquents. 

This initiative is not only a push to recover lost tax revenue but also a demonstration of the IRS’s capability to leverage its enhanced resources effectively. It comes as President Joe Biden’s administration has provided additional funding to the IRS, and the agency seeks to showcase results from this increased funding to counter efforts by some in Congress to reduce its budget.

Werfel emphasized the role of cutting-edge tools in this endeavor, stating, “New tools are helping us see patterns and trends that we could not see before, and as a result, we have higher confidence on where to look and find where large partnerships are shielding income.” 

He also revealed that dozens of revenue officers will be dedicated to handling these high-end collection cases in fiscal year 2024. Research conducted in 2021 by a team of academic economists and IRS researchers revealed that the top 1% of income earners in the United States fail to report over 20% of their earnings to the IRS. 

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Balancing Tax Enforcement

IThe IRS has unveiled an ambitious plan to pursue 1,600 millionaires and 75 large business partnerships that collectively owe hundreds of millions of dollars in past due taxes.

This tax collection effort aims to address such discrepancies and level the playing field for all taxpayers. The IRS’s intensified efforts are set to begin as early as October, signaling a busy season for the agency as they ramp up their operations. 

While some have expressed concerns about the IRS’s expanded powers and resources, Senate Finance Committee Chair Ron Wyden sees this initiative as a significant step in ensuring that the wealthiest individuals pay their fair share of taxes.

However, there are also concerns about potential overreach or misuse of these resources. Grover Norquist, head of the conservative Americans for Tax Reform, cautioned that the IRS’s ability to pursue high-net-worth individuals should not be seen as a blank check to target middle-income Americans for audits based on political motivations.

As the IRS embarks on this endeavor, it does so with resources provided by the Inflation Reduction Act, signed into law by President Biden in August 2022, which allocated $80 billion to the agency. Nevertheless, the possibility of budget cuts and reductions looms, as House Republicans have already sought a $1.4 billion reduction to the IRS budget. 

Additionally, a separate agreement diverts $20 billion from the IRS to other non-defense programs over the next two years. With the ever-present potential for government budget disputes, the fate of the IRS’s enhanced resources remains uncertain. 

However, the agency is undeterred in its mission to hold wealthy tax evaders accountable and ensure a fair and equitable tax system for all Americans.

Read Also: Tax Troubles Unveiled: How Your Accountant’s Falsehoods Could Cost You Thousands with IRS

Source: Tampabay

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