IRS Recovers $1.3 Billion from Wealthy Tax Evaders in New Initiative
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IRS Enforcement Initiative Yields $1.3 Billion Recovery
The U.S. Treasury and Internal Revenue Service announced a significant achievement in their ongoing enforcement efforts, recovering a remarkable $1.3 billion in unpaid taxes from affluent individuals. This initiative is part of a broader strategy funded by $60 billion designated for IRS modernization through the climate-focused Inflation Reduction Act.
Importance of the Initiative
This recovery is particularly noteworthy amidst political debates surrounding IRS funding. Congressional Republicans have actively opposed the 10-year budget that was enacted in 2022, claiming that it would subject American taxpayers to unwarranted scrutiny. Notably, Donald Trump, a Republican presidential candidate, has pledged to eliminate any unspent funds associated with the Inflation Reduction Act, which encompasses substantial allocations for the IRS.
Future Plans for IRS Funding
The IRS has earmarked approximately $10.6 billion from the allocated funds to be utilized through the conclusion of the fiscal year 2024, which wraps up on September 30, 2024. This leaves a staggering amount of nearly $50 billion potentially recoverable. However, financial analysts indicate that rescinding these funds could exacerbate the federal budget deficit by over $100 billion in the coming decade due to the loss of enhanced enforcement capabilities.
Statistics on Tax Collection
In the initial six months of this enforcement initiative, which specifically targets 125,000 high-net-worth individuals who have failed to file their tax returns since 2017, $172 million has been collected from 21,000 non-filing taxpayers. An additional initiative aimed at individuals with income exceeding $1 million and recognized tax debts of $250,000 or more has successfully generated $1.1 billion for the Treasury.
Remarks from Treasury Secretary Janet Yellen
U.S. Treasury Secretary Janet Yellen emphasized the significance of these enforcement measures, noting a dramatic 80% drop in audit rates for millionaires, a situation attributed to previous budget cuts at the IRS. Yellen pointed out that during the last administration, the decline in audits for high-income individuals correspondingly led to increased audits for taxpayers earning less than $200,000. In 2019, estimates indicated that the top 1% of earners were responsible for over 20% of unpaid taxes, placing the burden disproportionately on average Americans.
Frequently Asked Questions
What is the recent amount recovered by the IRS?
The IRS has recovered a total of $1.3 billion in unpaid taxes from wealthy individuals.
How is this recovery funded?
This recovery is funded through $60 billion allocated for IRS modernization as part of the Inflation Reduction Act.
What are the future implications of IRS funding cuts?
Cuts in IRS funding could potentially increase the federal budget deficit by more than $100 billion over the next decade due to reduced enforcement efforts.
Who are the targeted individuals in the IRS initiative?
The initiative primarily targets wealthy individuals, including those who have not filed tax returns and those with significant unpaid tax debts.
What did Treasury Secretary Janet Yellen state about audit rates?
Janet Yellen noted that audit rates for millionaires fell by 80% due to budget cuts, leaving a disproportionate number of audits focused on lower-income taxpayers.
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