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Sat. Jul 13th, 2024

IRS reports collecting $1 billion in back taxes from wealthy households

By meerna Jul11,2024
IRS reports collecting  billion in back taxes from wealthy households

The IRS said Wednesday it has collected $1 billion in taxes and penalties owed by hundreds of wealthy households that have accumulated delinquent tax debts for years while IRS enforcement has declined.

“The tax bill wasn’t even in dispute — there were clearly delinquent taxes owed by these people,” IRS Commissioner Danny Werfel told reporters. “But we didn’t have the people or the resources. … It takes time and personnel to get these things done.”

The tax agency, boosted by $60 billion in additional funding from the Inflation Reduction Act of 2022, has hired hundreds of qualified accountants over the past year and a half after years of cutting staff. Some of them focused their efforts on specific groups of delinquent taxpayers, including a group of 1,600 households with annual incomes above $1 million that were all known to owe at least $250,000 in taxes, based on their past tax returns. IRS leaders acknowledge that in the past, their agents simply didn’t try to collect those taxes for years, struggling with staffing shortages.

The new enforcement campaign began last year with letters to at least 1,500 people in the target group reminding them what they owe, Werfel said. About 100 of them paid a combined $100 million in taxes, interest and penalties in the first month or so, Werfel said.

Others required much more effort, and in some cases, seizure of taxpayer assets to collect the money. Werfel described months of letters exchanged between the new IRS agents and the millionaires’ accountants and lawyers.

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The push, which IRS officials described this week, was aimed at people who filed tax returns but didn’t pay. The agency is also going after a much larger group: wealthy people who didn’t file returns at all.

The IRS stopped sending reminder letters to people who failed to file a tax return in 2017. This year, it resumed the practice, notifying up to 25,000 people who previously reported annual income above $1 million, as well as up to 100,000 people whose income exceeded $400,000 annually, that they had not filed a tax return in one or more recent years.

Werfel said the agency will likely announce in the fall how much money was received for the letters.

“When the IRS fails to fulfill its mandate and responsibility to enforce tax laws, (it) creates an atmosphere where more and more people feel they can’t file a tax return or pay their taxes,” Werfel said. “Announcements like this one, where we indicate that we are actively working to identify non-filers and delinquent taxpayers … put other taxpayers on notice.”

By meerna

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