The IRS is seeing positive results from its efforts to combat tax evasion, particularly among wealthy individuals. In a recent announcement, the agency revealed that it has already collected $122 million from 100 millionaires who were delinquent on their taxes.

This amount is in addition to the $38 million that has already been recovered from 175 other wealthy individuals. Overall, the IRS has recouped a total of $160 million in back taxes from affluent households, according to IRS Commissioner Danny Werfel.

Werfel emphasized that these funds demonstrate the significant impact the agency's enforcement actions are having. The money collected is being utilized as part of the Inflation Reduction Act, a tax and climate package enacted last year. This legislation allocated billions of dollars to the IRS for the purpose of improving operations, enhancing customer service, and strengthening enforcement measures against super-rich taxpayers and major corporations.

Some of the recovered funds stem from criminal cases in which individuals have been ordered to pay restitution or have pleaded guilty. One such case involved a person who falsely claimed that personal expenses incurred while constructing an extravagant mansion, complete with tennis, basketball, and bocce courts, were deductible business expenses. This resulted in a $15 million restitution order.

Additionally, another individual defrauded a business out of over $670,000 by submitting a false tax return. It was discovered that this person had spent $502,000 on gambling activities.

The IRS's intensified focus on high-earners is clearly yielding successful outcomes. As the agency continues to prioritize its enforcement efforts, it sends a clear message that tax evasion will not be tolerated, regardless of income level.

Tax Gap Widens to $688 Billion in 2021

Recent estimates from the Internal Revenue Service (IRS) reveal a staggering $688 billion gap between the amount of taxes owed and the amount of taxes actually paid during the 2021 tax year. This concerning figure highlights the pressing need for increased enforcement and collection efforts.

Focus on Corporate Tax Compliance

In addition to addressing individual tax non-compliance, the IRS is now setting its sights on major corporations. In the coming year, the agency plans to conduct 60 audits on these businesses, which boast an average of $24 billion in assets and generate approximately $526 million in taxable income annually. By targeting these corporations, the IRS aims to ensure that they meet their tax obligations fully.

Subsidiaries of Foreign Companies Under Scrutiny

To close another potential loophole, the IRS will be sending around 150 alerts to U.S.-based subsidiaries of foreign companies. The agency suspects that some of these subsidiaries are not reporting the complete amount of income generated within the United States, despite being subject to U.S. taxation. By alerting these subsidiaries, the IRS hopes to remind them of their tax obligations and encourage self-correction.

Audits Extended to Large Partnerships

The IRS has been proactive in its efforts to hold large partnerships accountable as well. Last month, the agency announced plans to conduct 75 audits on large partnerships, including law firms and hedge funds. This initiative aims to ensure that all entities, regardless of their size or influence, are compliant with tax regulations.

Funding and Budget Challenges

As the IRS continues its mission to address tax non-compliance, it faces additional challenges due to the impending government shutdown and the current vacancy for the role of House Speaker. The agency recognizes that its efforts are further complicated by ongoing budget uncertainties. Nevertheless, the IRS remains committed to fostering tax compliance and ensuring a fair and equitable system for all taxpayers.