As part of continuing compliance efforts under the Inflation Reduction Act, the Internal Revenue Service (IRS) has intensified its efforts to target high-wealth taxpayers with unpaid taxes, surpassing the $1 billion mark. This initiative follows years of underfunding, leading to historically low audit rates for high-income earners.
As part of a broader initiative, the IRS has intensified its efforts on 1,600 high-income individuals, each earning over $1 million annually and owing more than $250,000 in recognized tax debt. Since last fall, this targeted compliance effort has collected over $1 billion from this cohort, with ongoing work to collect more unpaid taxes.
Before the Inflation Reduction Act, more than a decade of budget cuts prevented the IRS from keeping pace with increasing complexity and ensuring that wealthy taxpayers, large corporations, and complex partnerships pay their taxes.
“With this collection activity, the IRS passed an important milestone in our effort to improve compliance and ensure fairness in the tax system,” said IRS Commissioner Danny Werfel. “Our increased work in this area means these past-due tax bills from high-end taxpayers are no longer being left on the table like they were too often.”
In the past two years, the IRS has launched:
- A new initiative to crack down on abuse of corporate jets for personal travel
- A campaign to collect taxes owed by 125,000 high-income, high-wealth earners who have not filed taxes in years
- Audits of 76 of the largest partnerships, with average assets of $10 billion, represent a cross-section of industries, including hedge funds, real estate investment partnerships, publicly traded partnerships, and large law firms
- Audits of the 60 largest corporate taxpayers, with average assets of $24 billion
- And a new regulatory initiative to close a significant tax loophole exploited by large, complex partnerships that could raise more than $50 billion in revenue over ten years
As previously reported on Conduit Street, Maryland Comptroller Brooke Lierman announced a new secure portal that Marylanders can use to make reports of suspected tax fraud. This new tool will support the agency’s efforts to close the more than $2.6 billion known tax gap in Maryland.
