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The IRS has hauled in tens of millions from rich people who failed to file tax returns

Sep 8, 2024 | Amnesty, FATCA, IRS - Internal Revenue Service | 0 comments

The first results of the revived IRS program are announced: Rich people who didn’t file tax returns for years have already paid $172 million in overdue taxes to the Internal Revenue Service, according to the first results of the agency’s revived program targeting scofflaws.

At the same time, the IRS has collected another $100 million in back taxes from rich households that did file tax returns but didn’t pay their bill. This effort has now raked in $1.1 billion since its start a year ago, Treasury officials said Friday.

Between the two initiatives, the IRS has already collected almost $1.3 billion — and there’s still more owed taxes on the table.

The initial results come from around 21,000 of the 125,000 households that allegedly haven’t filed tax returns since as far back as 2017.

“This is just a first milestone, and we look forward to more progress ahead,” Treasury Secretary Janet Yellen said, according to excerpts of a Friday speech.

After a wave of quickly resolved cases, there could still be hundreds of millions of dollars coming to federal coffers before the unfiled returns are addressed, a senior Treasury Department official said.

Meanwhile, around 80% of the 1,600 millionaire households that were behind on undisputed tax debts have now made a payment. In July, the IRS said it passed the $1 billion mark on these back taxes.

The haul is separate from other recent measures to toughen high-end tax enforcement. That includes audits for nearly 80 complex partnerships such as hedge funds and law firms.

Two years ago, the IRS received billions of dollars over a decade from the Inflation Reduction Act for staff and technology that will stiffen enforcement for businesses and rich households while also improving customer service.

Though the Inflation Reduction Act passed in 2022 with Democratic support, Republican lawmakers have been wary of the multibillion-dollar infusion for its potential overreach and waste. GOP lawmakers succeeded in rescinding about $20 billion of the 10-year allocation of $80 billion during debt-ceiling negotiations in 2023.

The IRS had spent $5.7 billion of the allotted $57.8 billion through March, according to the Treasury inspector general for tax administration.

The agency has been highlighting its spending plans and results since the 2022 law’s passage. For instance, the nonfiler program ran occasionally since 2016 due to budget and staff limitations, the Treasury Department said.

When people file tax returns, they have to report information on tax forms like W-2s and 1099s, even though the IRS gets its own copies.

In the nonfiler program, the IRS had those forms but never received a tax return. The forms it possessed indicated income of between $400,000 and $1 million–plus. It’s just taken extra staffing to handle the correspondence with nonfiling households and their representatives, IRS Commissioner Danny Werfel previously said.

Friday’s announcement happened to come a day after Hunter Biden pleaded guilty to federal tax charges and averted a trial. Prosecutors said President Joe Biden’s son had failed to pay $1.4 million in taxes.

When Werfel announced the restart of the nonfiler program in February, he noted there’s a range of consequences when people don’t file tax returns. Depending on the facts, that can stretch from IRS penalties to criminal cases on the other end, he noted at the time.

Do not miss the opportunity to apply to the Foreign Offshore Streamline Procedure with US Tax Consultants before the IRS contacts you.

From TaxWatch on September 6, 2024.

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