IRS Recovers $1 Billion in Unpaid Taxes from Wealthy Americans

IRS Recovers $1 Billion in Unpaid Taxes from Wealthy Americans

IRS Achieves Major Tax Recovery Thanks to Enhanced Funding

The U.S. Internal Revenue Service (IRS) announced on Thursday that it successfully recovered $1 billion in unpaid taxes from wealthy individuals. This significant achievement underscores the ongoing debate about tax enforcement and political priorities concerning tax evasion among America’s richest citizens, according to Common Dreams.

Enhanced IRS Funding and Political Implications

Representative Bill Pascrell (D-N.J.) highlighted that this recovery was made possible by historic funding provided by Democrats. He criticized Republicans for opposing these measures, stating, “Every single Republican in Congress voted against it and Republicans are hellbent on helping millionaires keep stealing from you.”

Impact of the Inflation Reduction Act

The Biden administration and Democrats in Congress pushed for the inclusion of $80 billion for the IRS in the Inflation Reduction Act (IRA) of 2022. This funding aimed to enhance the IRS’s ability to enforce tax laws by hiring more staff to address tax evasion among wealthy individuals and corporations. However, the Republican-led House, under former Speaker Kevin McCarthy (R-Calif.), attempted to repeal this funding, arguing that Democrats intended to increase the tax burden on working Americans.

GOP Opposition and Legislative Changes

Despite the efforts to repeal the funding, the GOP succeeded in reducing the IRS’s budget by $20 billion as part of a deal to suspend the debt ceiling in May 2023. This move reflected the Republican Party’s stance on limiting the IRS’s capabilities, which they view as overreaching and burdensome to taxpayers.

Bobby Kogan, senior director of federal budget policy for the Center for American Progress, stated that preventing the IRS from targeting wealthy tax evaders remains a primary goal for the GOP. An analysis by Americans for Tax Fairness (ATF) revealed that during former President Donald Trump’s administration, the IRS audited low-income Americans at a higher rate than millionaires for the first time.

IRS Enforcement Actions and Future Plans

With the new funding, the IRS was able to identify and pursue 1,600 taxpayers with incomes exceeding $1 million, each owing more than $250,000 in tax debt. IRS Commissioner Daniel Werfel conveyed a strong message to these taxpayers, asserting that the agency is now better equipped to ensure compliance.

New IRS Rules to Combat Tax Evasion

Last month, the IRS proposed a rule to halt “partnership basis shifting,” a tactic used to evade taxes by moving assets. The Treasury Department estimates that this rule could recover more than $50 billion in revenue over the next decade.

The recent recovery of $1 billion represents the impact of just $5.7 billion—about 10%—of the IRA funding. Americans for Tax Fairness noted, “This is what happens when you fund the IRS. Anyone trying to cut IRS funding just wants to protect rich tax cheats.”

Ensuring Fair Taxation

The recovery of unpaid taxes underscores the importance of adequately funding the IRS to enforce tax laws effectively. As political battles over IRS funding continue, the agency’s ability to target wealthy tax evaders remains a contentious issue. Ensuring that all Americans, regardless of income level, pay their fair share of taxes is crucial for economic justice and the integrity of the tax system.