IRS recovers nearly a half-billion dollars from millionaires who hadn’t paid taxes

The IRS took a victory lap Friday in announcing it has sweated $482 million out of a pool of 900 millionaires who had outstanding tax debts.

The tax agency also said it has opened examinations of 76 large partnerships, averaging $10 billion in assets. Officials said they are using artificial intelligence to help select targets for enforcement, hoping to make it easier to peer into cases that have traditionally been tough to swallow because of their complexity.

In a year-end update, IRS Commissioner Daniel Werfel also said the agency doled out 560 new job offers in the last two months to accountants who will be asked to focus on auditing the wealthy. In one two-day hiring spree in Houston last month, the IRS said it hired 160 accounts, short-circuiting a process that can sometimes take six months.

The agency said the moves are all possible because of the infusion of money the Democrat-led Congress and President Biden approved in 2022 as part of the budget-climate bill.

“We are adding staff and technology to ensure that the taxpayers with the highest income, including partnerships, large corporations and millionaires and billionaires, pay what is legally owed under federal law,” Mr. Werfel said.

Sweating more out of millionaires has been a particular focus, both for liberal pressure groups and now for Mr. Biden, who faces a reelection campaign this year with an electorate antsy over the economy and inflationary prices.

Mr. Werfel, in his memo, pointed to a number of criminal cases of tax cheats that resulted in sentences. He also highlighted a deferred prosecution deal with a Swiss bank he said will pay $122.9 million to the federal government to compensate for having helped U.S. taxpayers shield their wealth in undeclared accounts during the Bush and Obama years.

The 900 millionaires who have paid the $482 million are in addition to another set of 175 wealthy taxpayers who have been prodded to pay $38 million on their tax debts. That brings the total millionaire recovery effort to $520 million, Mr. Werfel said.

He said there are 700 other millionaires still in the target group. They all have more than $1 million in annual income and more than $250,000 in unpaid taxes.

The annual tax gap — the amount the IRS figures it is owed but goes unpaid — is nearly $700 billion.

The half-billion dollar recovery effort pales in comparison, but IRS officials figure the recovery efforts will encourage more voluntary compliance which could reduce the gap.