IRS collected $1 Billion from Rich Tax Scofflaws

July 19, 2024 1:00 PM

IRS reports collecting $1 billion from rich households’ back taxes (WaPo, July 11, 2024; archive link). For years, the tax agency simply didn’t try collecting sizable debts owed by 1,600 people with annual incomes of at least $1 million.

The 2022 Inflation Reduction Act [IRA] (1-pg summary) authorized supplemental funding for the ailing Internal Revenue Service through September 30, 2031, allowing the agency to add hundreds of auditors. Every three months, the office of the US Treasury Inspector General for Tax Administration shows "how much of that money the IRS has spent. As of March 31, 2024, the IRS has spent $5.7 billion of its $57.8 billion in IRA funds. Use the dashboard below or read our report for more details."

Through the IRS’ concerted efforts, the Biden Administration has already made significant strides. It has collected over $500 million in unpaid taxes from fewer than 2,000 delinquent millionaires. ("President Biden’s 2025 Budget: Ensures Tax Fairness for American Families" March 15, 2024 fact sheet)

IRS ramps up new initiatives using Inflation Reduction Act funding to ensure complex partnerships, large corporations pay taxes owed, continues to close millionaire tax debt cases (irs.gov, Jan. 12, 2024)

Cutting IRS funding is a gift to America’s wealthiest tax evaders (brookings.edu, Jan. 26, 2023) In 2017, the IRS employed less than 10,000 revenue agents—the last time that was true was 1953: the Brooklyn Dodgers were in the World Series, the median housing price was about $8,000, and the IRS was handling over 100 million fewer individual income tax returns a year.

How the IRS Was Gutted (ProPublica, Dec. 11, 2018) An eight-year campaign to slash the agency’s budget has left it understaffed, hamstrung and operating with archaic equipment. The result: billions less to fund the government. That’s good news for corporations and the wealthy.
Tax obligations expire after 10 years if the IRS doesn’t pursue them.[...] Corporations and the wealthy are the biggest beneficiaries of the IRS’ decay. Most Americans’ interaction with the IRS is largely automated. But it takes specialized, well-trained personnel to audit a business or a billionaire or to unravel a tax scheme. [Previous discussion on MetaFilter.]

posted by Iris Gambol (32 comments total)

more of this please and thank you
posted by EmpressCallipygos at 1:03 PM on July 19 [22 favorites]

Forgive me if I’m missing something here…. does it say they spent $5.7 Billion to get $1 Billion? Don’t get me wrong, I strongly dislike tax evasion but that expense seems a bit lopsided.
posted by JakeEXTREME at 1:08 PM on July 19

does it say they spent $5.7 Billion to get $1 Billion

My brief read is they spent $5.7 billion to become a functioning organization again, and so far have returned $1 billion on that investment just in cleaning up a small part of the mess.

It's like saying to an MD intern oh my god you have $200,000 in school debt but you're only making $45k this year!!! Failure!! Ok let's see how this looks a few years down the road before we panic.
posted by phunniemee at 1:13 PM on July 19 [49 favorites]

Like you i have yet to RTFA(s) but seems likely from the post it seems reasonable to conclude that the $5.7B was a general expenditure for funding a variety of activities and not targeted solely at the recovery of funds from scofflaws
posted by armoir from antproof case at 1:13 PM on July 19 [4 favorites]

Reading through the linked document, the total expenditure on enforcement was about $690M. That's the spend on enforcement across the entire organization, not just the $1B from the rich households mentioned above.
posted by phooky at 1:17 PM on July 19 [14 favorites]

Thank you for posting this! It was on my list of things to post, but I probably wouldn't have gotten to it, and it's GREAT news.

I was not aware that tax obligations expire after 10 years.

I am SO glad the IRS has more funding now to enforce the law.

Appreciation to Joe Biden for proposing this whole package and to everyone who voted for it. (Per Wikipedia's article on the Inflation Reduction Act, all Democrats in the Senate and House voted for the bill while all Republicans voted against it.

I find it inspiring to do quick web searches to see the kinds of things that $1 billion in federal funds can do. I wonder how many free summer lunches for kids that pays for.

Thank you so much for sharing this, Iris Gambol! It's always nice to kick off my weekend with some good news.
posted by kristi at 1:36 PM on July 19 [14 favorites]

does it say they spent $5.7 Billion to get $1 Billion

You certainly hope that the money spent by the IRS would have an equal or higher payoff in the form of tax payments recovered.

But a much greater (and likely unquantifiable) amount of tax revenue will be raised by taxpayers who now have a greater fear of the IRS's accelerated enforcement efforts, and will be more likely to comply on their own volition.
posted by Kibbutz at 2:07 PM on July 19 [4 favorites]

JakeEXTREME: "Forgive me if I’m missing something here…. does it say they spent $5.7 Billion to get $1 Billion? "

As I read it, it's saying they were allocated 57.8 billion in emergency funding to fix the issues in the agency, but they've barely begun to spend it on actually fixing anything. Imagine how much they'll bring in from back taxes when they've used ALL of the money on improving the agency.
posted by caution live frogs at 2:08 PM on July 19 [3 favorites]

understand this: as soon as the republicans get in power, their backers will demand the hobbling of the IRS again.
posted by lalochezia at 2:08 PM on July 19 [14 favorites]

I really think actions like this will pay off in the long run. Just showing government agencies do what they are intended to do -- are functional -- is huge.
posted by ichomp at 2:09 PM on July 19 [7 favorites]

No wonder all the major newspapers and their billionaire owners are pumping Trump as the "unity" candidate.
posted by clawsoon at 2:21 PM on July 19 [17 favorites]

This story was the first thing I thought about when it was reported all of Biden's big donors want him to drop out of the race. Biden's doing all the things liberals have been complaining for decades they wanted their President to do then when he does it they all turn on him because the billionaire run corporations that they get their opinions from tell them to. The real liberal leaders in the caucus - Bernie, Warren, AOC are with Biden and so am I.
posted by any major dude at 2:30 PM on July 19 [36 favorites]

More Biden wins!!!!!! Thank you for this post.
posted by bluesky43 at 2:37 PM on July 19 [6 favorites]

I love how Republicans want to defund the IRS, but they also complain about the US spending more money than it gets back in taxes. Oh and they complain about how long they have to wait to get refunds. It’s like none of them know how to run a business.
posted by caviar2d2 at 3:33 PM on July 19 [15 favorites]

The new enforcement campaign started last year with letters to at least 1,500 people in the target group, reminding them what they owed, Werfel said. About 100 of them paid a total of $100 million in taxes, interest and penalties in the first month or so, Werfel said.

Others took much more effort, and in some cases, levies on the taxpayers’ assets to collect the money. Werfel described months of letters back and forth between the IRS’s new agents and the millionaires’ accountants and lawyers.

I advise the IRS to settle for 1,600 pounds of flesh. Collected from the top.
posted by AlSweigart at 3:48 PM on July 19 [4 favorites]

I'm cheering on the IRS?

Holy shit, what timeline am I in again?
posted by Sphinx at 4:28 PM on July 19 [4 favorites]

Billionaires hate this one weird trick!

(tax enforcement)
posted by General Malaise at 4:35 PM on July 19 [9 favorites]

If you were wondering why entrenched power in America has it's knives out for Biden, wonder no further.
posted by mrjohnmuller at 4:37 PM on July 19 [20 favorites]

Donald Trump Built a National Debt So Big (Even Before the Pandemic) That It’ll Weigh Down the Economy for Years (ProPublica, Jan. 14, 2021)
posted by Iris Gambol at 6:03 PM on July 19 [9 favorites]

Abolish the IRS? How Republicans are keeping up attacks on the tax agency (CNN, Jan. 9, 2024)
posted by Iris Gambol at 6:03 PM on July 19 [4 favorites]

Forgive me if I’m missing something here…. does it say they spent $5.7 Billion to get $1 Billion?

What you're missing is that in addition to the $1 billion, there is the fact that some billionaire tax cheats that would have just blithely ignored their societal responsibility because they would have rather continued to be greedy schmuckos got their comeuppance.

In the words of an old commercial slogan:

A new team of accountants and infrastructure: $5.7 Billion.
Postage for 25,000 letters to tax scofflaws: $12,250.
Pinning some greedy-ass 1%'ers to the wall and making them pay their damn fair share like the rest of us the way they're FUCKING SUPPOSED TO dammit - PRICELESS.
posted by EmpressCallipygos at 7:37 PM on July 19 [10 favorites]

Just adding my voice, to the, "This is why I'm voting for Biden." chorus. Fuck yes, IRS!
posted by evilDoug at 7:54 PM on July 19 [4 favorites]

If you were wondering why entrenched power in America has it's knives out for Biden, wonder no further.

I came here to say exactly this. Make a functioning IRS and eliminating student debt and suddenly Biden is too old and all his billionaire donors threaten to pull funding. What an interesting coincidence.
posted by Literaryhero at 8:09 PM on July 19 [14 favorites]

In addition to properly funding and staffing the IRS to implement existing tax code, the Inflation Reduction Act: allows Medicare to negotiate prescription drug prices, and caps out-of-pocket costs to $2,000 [ex. $35 insulin co-pay cap]; invests in domestic clean-energy production; improves air quality by reducing carbon emissions by roughly 40 percent by 2030; modifies and extends the clean energy Investment Tax Credit, for "qualifying investments in wind, solar, energy storage, and other renewable energy projects that meet prevailing wage standards and employ a sufficient proportion of qualified apprentices from registered apprenticeship programs" [see kristi's recent, excellent FPP]; "provide[s] place-based bonuses for investing in low-income communities and communities that have historically depended on the fossil fuel industry for jobs or been harmed by pollution"*; closes the carried-interest loophole (estimated revenue: 14 billion); & enacts a 15% corporate minimum tax (expected revenue: 313 billion).

*Low-Income Communities Bonus Credit Program explainer from the Office of Energy Justice and Equity [FKA]: The Low-Income Communities Bonus Credit Program supports the Biden-Harris Administration’s Investing in America agenda – a transformative set of investments designed to create jobs, lower costs for American families, and spur an economic revitalization in communities that have historically been left behind. The Department of the Treasury and the Internal Revenue Service (IRS) established the program under section 48(e), which was added to the Internal Revenue Code by the Inflation Reduction Act, to promote cost-saving clean energy investments in low-income communities, on Indian land, as part of affordable housing developments, and benefitting low-income households.
posted by Iris Gambol at 9:42 PM on July 19 [4 favorites]

But for Biden, it was a Tuesday. Going forward, the president wants to raise that 15% corporate minimum tax to 21%, and raise the overall corporate tax rate to 28%; end corporate tax breaks for multi-million-dollar executive compensation; eliminate the tax break given to corporate jets and increase the fuel tax on corporate and private jet travel; and levy a 25 percent minimum income tax on the wealthiest 0.01 percent (those with wealth of more than $100 million).
posted by Iris Gambol at 9:43 PM on July 19 [4 favorites]

It might not really matter, but to fix up some misapprehensions from much earlier in the thread:

The 5.7B figure is indeed the total amount of supplemental funding spent on any/all activities so far, not just on enforcement (as phunniemee pointed out early on). A very large chunk of that was spent on "taxpayer services," e.g. the phone representatives who help you out when you have questions!

According to the charts in this document, 690.9 million is the total portion of the supplemental funding spent so far on enforcement (p.5), but 62 million of that was used to fill a hole in the regular enforcement budget left by the Republican's let's-maybe-shut-down-the-government hostage taking (p.4). [These two charts in tandem are frustratingly easy to misinterpret.]

So (doing the math there) it looks like 628.9 million is the portion spent on new enforcement activities, which has already brought in the headline 1 billion of new income (plus, as others have pointed out, it'll act as a deterrent to additional tax cheats, but it's already a bargain even without those knock-on effects).

(The total amount spent on enforcement activities, by the way, in 2023 alone, as per the chart on page 51 here, is 5.6 billion, much larger than the supplemental stuff.)

(And one more angle, separate from correcting anything from earlier: as per that p.4 chart, a full 2 billion dollars of the 5.7B headline number was used to fill various holes left by the government-shutdown hostage taking. So, if you're looking for the total amount of Inflation Reduction Act supplemental funding spent so far on actual new things/expansion, that's really just 3.7 billion.)
posted by nobody at 11:52 PM on July 19 [2 favorites]

I'm cheering on the IRS?

Holy shit, what timeline am I in again?

The timeline where enclosure of the commons by oligarchs proceeds apace.

Garys Economics:
Why Are Taxes So High? (YouTube/Piped/Invidious, 20m16s)
Taxing the Rich = Growing the Government? (YouTube/Piped/Invidious, 10m9s)

Increasingly, we are in a situation where the assets are owned by people who never have to sell any assets. If that is the situation, obviously working people like you, like your kids, like your parents, will never be able to afford assets. If you want working people to be able to afford assets, like housing, it is essential that the current owners of assets at some point sell their assets.

If you give all the assets to people who never sell assets, it will be impossible for working people without assets to buy assets. This is how things work: it is impossible to buy a thing if nobody is selling the thing. It is vital, in order to get things like housing back into the hands of ordinary working families, that the owners of assets sell their assets. At the moment, the super-rich have enormous passive incomes and never sell anything; we need them to sell their assets.

So for me, taxing the super-rich is not about growing government. It's definitely not about moving us to a communist State. Taxing the rich is about re-balancing power and ownership in our society. At the moment, both government and the middle class are losing their wealth rapidly to the rich. The only way to get that back is through taxation.

...

I would like to get you to see taxation in a new light. Taxation has been given a terrible brand, largely by rich people because they don't want to pay it. But taxation is how you defend yourself. Taxation is how you get your wealth back from the group that is taking your wealth. And I want you to see taxation as a tool you can use in what is essentially a war.

Now when you have a war - when you have an invading army - why do people invade countries? Why do people start wars? Because they want to take the assets. And what is happening in your country? Assets that used to be owned by the middle class, that used to be owned by the government, are over time being owned by the rich and the super-rich.

That is what war is! War is about taking assets. Your assets will not be owned by your kids or your grand-kids; they'll be owned by the kids and grand-kids of the super-rich. They are an invading army. The only tool you have to defend yourself is taxation. So if we tax the rich, we can get money in your pocket, we can get assets to your kids and your grand-kids. If we don't tax the rich, inequality will grow more and more and your grand-kids will be poor.

friendlyjordies:
A Tale as Old as Rome (YouTube/Piped/Invidious, 1h30m)

Maybe it's that if you take away all of the labels that I'm always trying to take away from politics of, like, left, right, progressive, conservative - you get rid of whatever the trendy word is of the time - you get rid of the argy bargy back and forth of like, Mr Speaker he's not going to his standing order he should... you know, like get rid of all of that - you know what you're left with? You are left with two thousand years of the exact same pattern. You have one of those two blocs - the permanent blocs of parliamentary systems. One bloc arguing for one very simple thing, all throughout history, which is: to protect and expand private assets that should clearly be public assets. That's it. Two thousand years. Same argument.

posted by flabdablet at 5:16 AM on July 20 [3 favorites]

Now onto the shell accounts, money in Monaco and Swiss banks. We have no idea of the wealth that exists beyond the reach of the IRS.
posted by DJZouke at 5:21 AM on July 20 [1 favorite]

Private ownership of any asset is protected by the government of the country that that asset is in.

If some rich fuck wants to piss off overseas in order to avoid having to pay a wealth tax on their in-country asset portfolio - if there are office blocks and apartments and factories and hospitals just sitting around that the IRS can't find out who the owner is because they're so all-fired keen to avoid paying tax on them as to fail to assert that ownership - then the government can just seize those assets, which amounts to taxing them at 100% of their assessed value regardless of whose ownership is thereby being annulled.

We don't need the rich; we need (more of) their assets. If they'd rather simply relinquish control of those altogether than pay tax on them: great! Nothing of value has been lost.
posted by flabdablet at 5:38 AM on July 20 [4 favorites]

This is also why taxing assets makes way more sense to me than taxing income. Money flows can be split and mixed and obfuscated in ways that make them very expensive to find, let alone add up, but assets are right there. All the IRS would need to do is point to an office block and say "whoever owns this thing needs to pay us ten million bucks by next Wednesday or they don't own it any more."

Also, because there are so few asset owners compared to income makers, taxing wealth instead of income would save an absolute fortune in administrative costs and general populace-level hassle.

Widespread acceptance of the idea that "broadening the tax base" is a good thing has been a major propaganda win for ultra-wealthy assholes. I don't want to see taxation "broadened". I want to see it laser focused on where the fucking money is.
posted by flabdablet at 5:46 AM on July 20 [2 favorites]

does it say they spent $5.7 Billion to get $1 Billion?

"As of March 31, 2024, the IRS has spent $5.7 billion of its $57.8 billion in IRA funds"

Federal expenditure in 2023 was $6 trillion this year (a tad down from the previous two years).

That works out to $164 billion a day. They have a ways to go.*

All the IRS would need to do is point to an office block and say "whoever owns this thing needs to pay us ten million bucks by next Wednesday or they don't own it any more."

An office building owner does not necessarily have ten million bucks in the checking account. Indeed, currently many owners and their banking partners are holding seriously underwater loans. An IRS insisting on cash money on an unprofitable or barely profitable building will result in serious jingle mail. The knock-on effects don't bear thinking on.

Same principle applies to a lot of business. Assets (read Book Value) as opposed to cash flow. Billy Bonka's Boffo Bakery, which employs a few hundred bakers and owns a bunch of expensive overs, could be snipped up and sold for parts to meet IRS demands for a percentage of book value, or it could keep chugging along, spinning money for all concerned, including the government. (Breaking up assets for immediate cash value is what the worst of the Wall Street pirates did back in the last century, and the Soviets even earlier. Economically and socially speaking, it tends not to go well)

(Simply put, assets do not have a fixed cash value. Cash value is only what a willing buyer will give to a willing seller. Thus real estate tax valuations are rarely alligned to market value. Thus the fight you may have with insurance adjusters if you are unlucky enough to have to deal with them.)

*(And that 57.8 is, of course, not going to be the end of it. The new accountants are now on the payroll and pension list, so, an ongoing expense unlikely to decline over the years. Whether there's a postivie ROI, I guess we'll see.)
posted by BWA at 1:31 PM on July 20 [1 favorite]

- Now onto the shell accounts, money in Monaco and Swiss banks.
Biden's plan to overhaul tax code would close offshore tax loopholes (NBC, April 7, 2021) At least 55 of the United States' biggest companies paid nothing in federal taxes for 2020, despite earning a collective $40.5 billion in pretax income. Biden Offshoring Tax Penalty; The Made in America Tax Plan; &

President Biden Is Fighting to Reduce the Deficit, Cut Taxes for Working Families, and Invest in America by Making Big Corporations and the Wealthy Pay Their Fair Share (WH Fact Sheet, March 7, 2024) Cracking down on tax avoidance by large multinationals and Big Pharma: For too long, big multinationals have moved jobs overseas and stashed their profits in tax havens. The 2017 Republican tax giveaway failed to fix these problems, instead giving windfalls to Big Pharma. President Biden negotiated a historic agreement with over 130 countries that would enable the U.S. and its partners to ensure Big Pharma and other multinationals pay at least a minimum tax rate. He is calling on Congress to implement the agreement with a 21% rate on multinationals, with almost one-fifth of the revenue coming from Big Pharma, according to analysis it funded.
posted by Iris Gambol at 1:55 PM on July 20 [2 favorites]