The IRS Has Collected $1 Billion From Wealthy Tax Evaders

Rich Americans who have tried to avoid paying their taxes are in for a rude awakening.

The Internal Revenue Service has collected a whopping $1 billion from wealthy tax evaders in one year, The New York Times reported on Thursday. The agency went after 1,600 people who had more than $1 million in income and more than $250,000 in owed taxes.

“Efforts to increase tax fairness and bring in revenue from high-end taxpayers who have not paid what they owe are already paying off to the American people,” Janet Yellen, the Treasury secretary, said during a briefing, according to the Times.

Thanks to an increase in the number of IRS employees, the agency has been able to target rich taxpayers who have been avoiding paying their fair share, IRS commissioner Daniel Werfel told the newspaper. The government agency has been sending letters to these residents, with threats of penalties if they continue to withhold their money. Werfel said he thinks many of these people initially failed to pay up because they believed that the IRS didn’t have the ability to pursue them anyway.

“Our message for these taxpayers is that now that we are resourced, we can do the job of ensuring that they pay,” he added.

The IRS is benefitting from an expansion that was included in the August 2022 Inflation Reduction Act. Initially, the agency was given $80 billion to modernize but that has since been decreased to $60 billion due to negotiations between Democrats and Republicans. Even still, the money is allowing the agency to pursue wealthy tax evaders and improve its customer service.

Along with the $1 billion the agency has already collected, it’s hoping to find more than 100,000 rich Americans who haven’t filed taxes in years. It has also been increasing the number of audits it carries out on hedge funds and real-estate investment partnerships and looking into the abuse of corporate jets for personal travel. And that’s only taken up $5.7 billion, or 10 percent, of its funding, according to a June report cited by the newspaper. (There have been complaints about the agency being slow to address identity-theft cases and respond to taxpayer questions, though.)

The IRS crackdown on high-net-worth individuals seems to be paying off—quite literally.