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- The IRS said it's made more progress in tracking down taxes millionaires owe.
- They also closed some cases, including a taxpayer deducting expenses to build a mega-mansion.
- There's more enforcement to come, thanks to the Inflation Reduction Act.
The IRS says its mission to crack down on higher-earning tax dodgers has yielded $122 million more from just 100 millionaires — and they've already closed several cases of particularly brazen evasion.
The passage of the Inflation Reduction Act infused billions of dollars into the previously perpetually underfunded and paper-laden IRS. A good chunk of that was earmarked for increased enforcement, and, in a new announcement, the IRS said that enforcement is only ramping up.
"Prior to the Inflation Reduction Act, more than a decade of budget cuts prevented the IRS from keeping pace with the increasingly complicated methods the wealthiest tax taxpayers used to hide their income and evade their paying their fair share of taxes," IRS Commissioner Daniel Werfel told reporters in a call. "Inflation Reduction Act funding gives us the ability to take swift and aggressive action to improve compliance and close the tax gap."
Since the passage of the IRA, the IRS has closed several cases of high-earning taxpayers getting creative with their business expenses and deductions.
In one case, according to Werfel, a former CEO was sentenced to a year in prison and ordered to pay over $15 million because he was deducting personal expenses as business expenses, and using that to finance his construction of a 51,000 square foot mansion. Some of those expenses he claimed included an outdoor pool, pool house, and tennis, basketball, and bocce courts, according to Werfel, alongside falsifying millions for luxury vehicles, artwork, country club memberships, and homes for his children.
Other cases Werfel highlighted: A restaurant owner skimming hundreds of thousands from his business to spend on himself and gamble, all while filing false tax returns. And in another case, someone received over $5 million in COVID-relief loans for a sham business, and then used that money to buy Ferrari, Bentley, and Lamborghini cars.
The IRS is specifically taking aim at Americans who earn over $1 million, and have over $250,000 in tax debt. An IRS memo previously viewed by Insider showed that nearly 1,000 taxpayers making over $1 million annually did not file their taxes multiple times between 2015 to 2020. That group of taxpayers — of whom 58 earn at least $10 million — were estimated by the IRS to owe over $34 billion as of May 2023.
In September, the IRS said it was contacting 1,600 of those millionaires who owe over $250,000 to try and get those back taxes. Now, the agency said that it's collected $122 million from 100 of those taxpayers. That's a grand total of around $160 million clawed back from high-earners, according to Werfel, when combined with the $38 million that the IRS previously collected from 175 high-earners. And that's all without the 1,500 other individuals that the IRS is working on.
"The funds that were collected should give you a fairly good idea of how much money is on the table for us to go to collect," Werfel said.
The agency will also start sending out notices to foreign firms that might not be adequately reporting their American profits, and will expand its corporate compliance program that helps figure out which big companies to audit.
Beyond chasing down high-earners, the IRS also said it's expanding taxpayer assistance across the country and online. That includes new physical centers, more staffing, new digital tools, and digitizing the piles of paper that the agency was once bogged down with.