U.S. Treasury and IRS Recover $1.3 Billion in Unpaid Taxes

WASHINGTON (Reuters) – The U.S. Treasury and Internal Revenue Service announced on Friday the recovery of $1.3 billion in unpaid taxes from wealthy individuals. This outcome is part of new enforcement initiatives funded by $60 billion allocated for IRS modernization through the climate-focused Inflation Reduction Act.

Why It’s Important

Republicans in Congress have pledged to rescind the 10-year IRS funding established in 2022, claiming it would unjustly harass U.S. citizens regarding their taxes. Republican presidential candidate Donald Trump also announced his intention on Thursday to revoke all unspent funds from the Inflation Reduction Act, which includes billions set aside for the IRS.

The IRS plans to utilize about $10.6 billion of this funding until the end of the 2024 fiscal year, concluding on Sept. 30. This leaves nearly $50 billion that might be recaptured. However, budget analysts predict that to do so would increase the federal budget deficit by over $100 billion over the next decade, as the agency bypasses enhanced enforcement methods.

By The Numbers

The Treasury reported that during the initial six months of an initiative aimed at targeting 125,000 wealthy individuals who have not filed tax returns since 2017, $172 million was collected from 21,000 non-filing taxpayers. Additionally, an initiative targeting wealthy individuals with over $1 million in income and $250,000 in unpaid, recognized tax debts has resulted in $1.1 billion being sent to the Treasury.

Key Quotes

U.S. Treasury Secretary Janet Yellen stated that the audit rate for millionaires has decreased by 80% due to budget cuts at the IRS. “During the previous (Trump) administration, as audit rates on high-income taxpayers fell, the share of audits on taxpayers with incomes under $200,000 increased,” Yellen remarked at an IRS service center in Austin, Texas. “In 2019, the top one percent of Americans was estimated to owe over one-fifth of unpaid taxes, leaving ordinary Americans to shoulder the burden.”