Millionaires Pay Tax Debt of Nearly $500 Million to the IRS

You probably pay your fair share of taxes like everyone else, but you also likely hold your nose when you do it. It’s not fair, you think. Why should I give up my hard-earned money when multi-million dollar corporations avoid taxes and exploit loopholes?

If you feel this way, there’s good news. Recently, the government enacted a plan to encourage or force millionaires to pay back taxes to the IRS. 

The IRS Plans to Collect a Fair Share From Millionaires and Billionaires

Shortly after the start of 2024, the IRS announced that it had collected nearly half a billion dollars from wealthy individuals with tax debt. Their ability to do this came on the heels of the Inflation Reduction Act (IRA), which helped them target high-net-worth individuals who were shirking their tax duties.

The IRA was approved in 2022. It earmarked $80 million over 10 years to bolster the IRS’ enforcement capabilities. The IRS estimates that thanks to the IRA, it will collect more than $561 billion from delinquent taxpayers over the next 10 years.

Why the Crackdown?

So, why is there suddenly a big push to make millionaires pay back taxes to the IRS? It’s simple: The IRS needs funding, and desperately so. In previous years, the government slashed the IRS’ funding so much that it was bleeding agents, making it nearly impossible for them to catch tax crooks out there.

The revenue collected from wealthy individuals and businesses can support new infrastructure, research into cures for health conditions, and other worthwhile pursuits.

How the IRS Catches High-Net-Worth Individuals Who Owe Back Taxes

So, how does the IRS do it? The agency employs several sophisticated tactics to catch non-payers. Here are just a few of them:

• Checking to see whether high-net-worth people have filed their tax returns. This one’s simple but very effective. To catch non-payers, the IRS targets people with more than $1 million in income and more than $250,000 in debt.
• Going after foreign corporations that don’t pay their fair share of taxes in the U.S. Currently, the IRS has sent 180 compliance alerts to subsidiaries of large foreign corporations.
• Investigating discrepancies on balance sheets that involve partnerships with more than $10 million in assets.
• Ramping up audits of the 76 largest U.S. partnerships with the help of AI. Artificial intelligence and machine learning have allowed the IRS to gather invaluable data on the nation’s biggest tax dodgers.

Examples of the Latest IRS Scores

So far, the IRS’ plan to gain tax debt is working well. Check out these successes:

• In December 2023, an individual was sentenced to more than 10 years in prison and ordered to pay $130,000 for involvement in a RICO conspiracy involving tax fraud.
• On January 24, 2024, two individuals were sentenced to more than 20 years in prison for conspiracy to commit wire fraud.
• One individual was sentenced to nearly 60 months in prison for failing to pay $1.35 million in taxes on restaurant sales they made in the Washington, D.C., area.
• In December 2023, an individual was ordered to pay $470,000 and spend nearly 60 months behind bars for filing a fake tax return while working as a mule for romance scams.

Protect Your Wealth With Tax Guidance from Levy & Associates

If you’re a high-net-worth individual and worry that the IRS might crack down on you, contact Levy & Associates for help. We’ll discuss strategies to safeguard your wealth legally to avoid running afoul of the IRS.

For a consultation with a tax attorney, call (800) TAX-LEVY.