https://www.forbes.com/sites/andrewleahey/2024/07/11/irs-collects-1-billion-in-back-taxes-from-millionaires/ Subscribe To Newsletters BETA This is a BETA experience. You may opt-out by clicking here More From Forbes Jul 11, 2024,09:23am EDT As More People Leave California Over Taxes, They May Face Tax Audits Jul 10, 2024,09:23pm EDT Many States Offer Sales Tax Holidays As Parents Eye Back-To-School Costs Jul 10, 2024,12:53pm EDT How To Distinguish FBAR Willfulness From Non-Willfulness With Examples Jul 10, 2024,12:48pm EDT Moore V. United States: Explaining The Supreme Court's Decision Jul 9, 2024,06:41pm EDT New FAQs And Legal Updates Impact Embattled New Company Reporting Law Jul 9, 2024,11:55am EDT Is Carbon Pricing The Best Way To Mitigate Climate Change? Jul 9, 2024,10:43am EDT UK VAT Pitfalls: Prevention Is Better Than Cure Edit Story ForbesMoneyTaxes IRS Collects $1 Billion In Back Taxes From Millionaires Andrew Leahey Contributor Opinions expressed by Forbes Contributors are their own. Tax and technology attorney, professor, podcaster, writer. Following Jul 11, 2024,01:37pm EDT Updated Jul 11, 2024, 04:30pm EDT * Share to Facebook * Share to Twitter * Share to Linkedin WASHINGTON, D.C. - JANUARY 03: The U.S. Flag flys above the International Revenue Service ... [+] headquarters building on January 3, 2024, in Washington, D.C. (Photo by J. David Ake/Getty Images) Getty Images In a press release, the IRS announced the collection of $1 billion in past-due taxes from millionaires since 2023. That year, the agency launched an initiative to pursue high-income, high-wealth individuals who have failed to pay their recognized tax debt. This particular phase of the initiative was focused on a small number of high-income individuals, totaling about 1,600. That puts the average tax levy on those individuals at $625,000--far outstripping the average return of about $54,000 in adjustments per audit. It seems clear the best return on audit investment lies with the highest income and wealth individuals. Initiative Targets The initiative targeted taxpayers with incomes of at least $1 million and recognized tax debts over $250,000. The IRS assigned dozens of senior employees to the cases and intensified efforts to ensure compliance among wealthy individuals. In addition, the IRS has cracked down on the misuse of corporate jets for personal travel, high-income owners that have not filed taxes, the auditing of 76 large partnerships and 60 corporate taxpayers and policymaking to close loopholes used by complex partnership. The IRS predicts a significant revenue yield, potentially as much as $851 billion over the next decade if the investments allocated under the Inflation Reduction Act (IRA) continue. MORE FOR YOU Microsoft Windows Deadline--You Have 21 Days To Update Your PC A Psychologist Explains 'Pebbling'--A Wholesome Dating Trend On The Rise Biden Vs. Trump 2024 Election Polls: Most Biden Supporters Say He Should Drop Out In Latest Survey GOP Funding Cuts For The IRS During the period in which the IRS was recovering $1 billion in past-due tax debts from high-income individuals, House Republicans were proposing significant cuts to the agency's budget. The latest Financial Services and General Government bill from the House Appropriations Committee aimed to reduce IRS funding for the fiscal year 2025 by $2.2 billion, lowering the budget to $10.1 billion--with a specific $2 billion cut to enforcement funding. The cuts were couched as preventions against the IRS "targeting hardworking Americans"--but enforcement actions in general have focused on individuals making $400,000 or more and specifically targeted 125,000 of the highest earners. Democratic leaders have criticized the cuts, arguing they would undermine efforts to improve tax fairness and compliance. The budget reductions are part of a broader pattern of GOP efforts to scale back the $80 billion funding boost provided to the IRS by the IRA. Expanding Audit Coverage To expand audit coverage to the top 1% of earners, the IRS would need to audit about 1.5 million returns--approximately three-times the total number of audits undertaken in 2023. From 2016 to 2021, the IRS focused on auditing individual taxpayers with $10 million or more in income and those audits had an average adjustment of $124,389 per return. At an average of $625,000 per return for the high-income 1,600 people chosen in this latest initiative, it seems clear a focus on higher income returns results in a higher per-audit adjustment. As of the end of 2023, the agency had only spent around 1% of its enforcement budget. The slow expenditure is a point of contention, highlighting the challenges the IRS faces in ramping up its enforcement efforts--but it seems clear where the other 99% should be invested. Follow me on Twitter or LinkedIn. Check out my website. Andrew Leahey Andrew Leahey Following * Editorial Standards * Print * Reprints & Permissions Join The Conversation Comments One Community. Many Voices. Create a free account to share your thoughts. Read our community guidelines here. [community-] Forbes Community Guidelines Our community is about connecting people through open and thoughtful conversations. We want our readers to share their views and exchange ideas and facts in a safe space. In order to do so, please follow the posting rules in our site's Terms of Service. We've summarized some of those key rules below. Simply put, keep it civil. Your post will be rejected if we notice that it seems to contain: * False or intentionally out-of-context or misleading information * Spam * Insults, profanity, incoherent, obscene or inflammatory language or threats of any kind * Attacks on the identity of other commenters or the article's author * Content that otherwise violates our site's terms. User accounts will be blocked if we notice or believe that users are engaged in: * Continuous attempts to re-post comments that have been previously moderated/rejected * Racist, sexist, homophobic or other discriminatory comments * Attempts or tactics that put the site security at risk * Actions that otherwise violate our site's terms. So, how can you be a power user? * Stay on topic and share your insights * Feel free to be clear and thoughtful to get your point across * 'Like' or 'Dislike' to show your point of view. * Protect your community. * Use the report tool to alert us when someone breaks the rules. Thanks for reading our community guidelines. Please read the full list of posting rules found in our site's Terms of Service.