IRS Nets $1B in Back Taxes From Millionaires

Facts

• The US Dept. of the Treasury announced on Thursday that the Internal Revenue Service's (IRS) crackdown on alleged delinquent, high-income taxpayers has recovered $1B in back taxes this year.¹
• This comes as the IRS narrowed in on 1.6K taxpayers who earned at least $1M a year and owed more than $250K in recognized tax debt, collecting $1B from over 1.2K individuals so far.²
• IRS Commissioner Danny Werfel told reporters that despite the debt of those targeted not being 'in dispute,' the tax agency lacked resources to pursue collections before the 2022 Inflation Reduction Act gave it a $60B boost in funding.³
• The Treasury Dept. proposed last month changes to target high-income individuals — including ending 'partnership basis shifting' to raise more than $50B over the next decade, in addition to rules to limit deductions for personal travel and to collect back taxes from millionaires.⁴
• Additionally, the IRS has resumed the practice of sending letters reminding those who haven't filed taxes after seven years. 25K people who formerly reported annual income above $1M and 100K individuals who earned over $400K a year have been warned that they had missed at least one filing over the past years.³
• Republicans and Democrats have been locked in a battle in Congress over the expansion of the IRS. As part of debt ceiling negotiations, the GOP was able to claw back $20B out of a proposed $80B in IRS funding.⁵

Sources: ¹New York Post, ²IRS, ³Washington Post, ⁴The Washington Times and ⁵New York Times.

Narratives

• Republican narrative, as provided by Wall Street Journal. The IRS has become bigger and worse than ever after being given newfound windfalls of cash to be an arbitrary and draconian institution. This federal agency has punitively enforced tax rules it invented on a whim and without the approval of Congress or the public. Perversely, those who make a mistake on their taxes can earn a fine of up to $10K, which leads to many not filing at all in the hopes of going unnoticed.
• Democratic narrative, as provided by Common Dreams. The GOP's efforts to demonize the IRS are falling flat. By narrowly targeting wealthy tax cheats, the IRS has been able to secure more government funding by simply giving the agency the resources that it needs. The attacks on the IRS are part of their 'starve the beast' strategy to deprive the public of much-needed funds and enable deep cuts to social services. Because of Democrats' policies, the IRS is now working as intended.

Predictions