IRS sweep for high-income back taxes hits $1.3B milestone

The US Department of the Treasury and the IRS have reached a new milestone in their efforts to recover unpaid taxes from high-income individuals.

In a joint statement Friday, Treasury Secretary Janet Yellen and IRS Commissioner Danny Werfel revealed their agencies have successfully collected $1.3 billion through initiatives supported by the Inflation Reduction Act.

The statement, issued in advance of a scheduled appearance by the two at the IRS's Austin, Texas campus, highlighted one initiative launched earlier this year, which targets 125,000 high-income taxpayers who have not filed tax returns since 2017. In the first six months of that effort, 21,000 individuals filed their taxes, resulting in $172 million in payments.

Those cases – where third-party documents shared with the IRS revealed individuals earned between $400,000 and $1 million, and others more than $1 million – had previously been neglected due to resource constraints.

Another effort, started in late 2023, focuses on individuals with incomes over $1 million and at least $250,000 in unpaid tax debt. That initiative has led to the recovery of over $1.1 billion from 1,600 taxpayers, 80 percent of whom have already made payments. It's been a rapid pace of progress, with an additional $100 million collected in the month since July, when the Treasury department and the IRS declared a landmark $1 billion haul through their efforts.

In remarks prepared for an IRS service center in Austin, Texas, Yellen highlighted how tax collection efforts on high-income earners eased while lower-income households saw tighter scrutiny, according to reporting by Reuters.

"During the previous administration, as audit rates on high-income taxpayers fell, the share of audits on taxpayers with incomes under $200,000 increased," Yellen said. "In 2019, the top one percent of Americans was estimated to owe over one-fifth of unpaid taxes, leaving ordinary Americans to shoulder the burden."