The Blubber

The IRS announced Friday that it has recovered $1.3 billion in unpaid taxes from wealthy Americans who either failed to file their tax returns or didn’t fully pay what they owed.

This joint announcement with the U.S. Treasury Department highlights the agency’s increased enforcement against tax evaders, which has been bolstered by funding from the 2022 Inflation Reduction Act.

The IRS funding has sparked controversy, with some Republican lawmakers falsely claiming it would be used to hire 87,000 new agents to "audit Walmart shoppers." However, the IRS clarified that the funds are being used to enhance customer service after pandemic-related delays and to increase audits on individuals earning over $1 million annually with more than $250,000 in unpaid taxes.

125,000 High Earners Haven’t Paid Taxes in Years

The goal of the initiative is to “ensure high-income earners pay what they owe,” Treasury Secretary Janet Yellen said in prepared remarks ahead of a speech in Austin, Texas. "For too long, this hasn't been happening. From 2010 to 2018, audit rates for millionaires dropped by 80%."

She added, "During the previous administration, as audits of wealthy taxpayers decreased, the share of audits on those earning less than $200,000 increased. In 2019, the top 1% of Americans was estimated to owe over one-fifth of unpaid taxes, placing the burden on ordinary citizens."

Yellen noted that the IRS is pursuing 125,000 wealthy taxpayers who haven’t filed taxes in years. Thanks to tougher enforcement, about 21,000 of these individuals have filed their returns in the last six months, contributing $172 million in taxes.

These 21,000 taxpayers were the first to respond after being contacted by the IRS. According to a senior Treasury official, the agency expects to collect hundreds of millions more in taxes from the remaining 104,000 individuals who still need to file.