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The IRS has now clawed back $1.3 billion from the country’s wealthiest taxpayers using initiatives launched after President Biden won historic funding increases for the tax agency.
Democrats’ budget-climate law in 2022 infused tens of billions of dollars into the IRS, with a large chunk of that dedicated to audits Mr. Biden said would force the wealthy to pay what they owe.
One of those initiatives targeted 125,000 wealthy households that hadn’t filed taxes for years. Six months into the effort, some 21,000 of them have paid up, to a total of $172 million.
“The IRS had not had the resources to pursue these wealthy non-filers. Now, it does, and we’re making significant progress,” Treasury Secretary Janet Yellen will say in remarks Friday in a speech in Texas.
Mr. Biden and Vice President Kamala Harris, who is now the Democrats’ nominee for president, have campaigned on promises to sweat more money out of the wealthy, arguing they cheat on their taxes at a disproportionate rate and, because of their incomes, it means large amounts of money the government never sees.
One IRS initiative is collecting confirmed tax debts from 1,600 wealthy filers.
Ms. Yellen will declare the IRS has now compelled nearly 80% of them to pay up, leading to $1.1 billion collected.
Yet two years into the spending infusion, the amounts recovered are tiny compared to what the IRS calls the “tax gap” — the amount of money the government believes it is owed, but not paid.
The latest estimate, for 2021, put the total tax gap at $688 billion initially, dropping to $625 billion once audits are completed.
Ms. Yellen said the IRS was starved for cash for most of the previous decade, tilting the balance in favor of tax cheats who were able to get away with paying less than they should. She argues the new cash infusion is restoring the balance.
Republicans say Mr. Biden has supercharged the IRS and warn that to get at the kind of money Democrats are expecting the agency to produce, it will have to target small businesses with intrusive audits.
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