IRS: $1.3 Billion Collected from Delinquent High-Income Taxpayers in the Past Year

The Internal Revenue Service (IRS) has collected $1.3 billion in delinquent taxes from high-income and high-net-worth taxpayers over the past 12 months. These recoveries are the result of two ongoing initiatives specifically focused on high-income and high-net-worth taxpayer compliance. If you fall into one (or both) of these categories, keep reading to learn more from Washington D.C. tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group.

The IRS is Targeting High-Income and High-Net-Worth Taxpayers

The IRS published the latest data on its high-income and high-net-worth taxpayer enforcement initiatives in a September 6, 2024 News Release. As explained in the News Release, the IRS is relying on enhanced funding under the Inflation Reduction Act to pursue enforcement efforts it was previously unable to pursue “due to a lack of resources.” With its enhanced funding, the IRS is focusing on pursuing enforcement in the areas that will have the greatest impact on closing the tax gap—and this includes targeting taxpayers who currently owe more than most people will owe over their entire lifetimes.

Over the past year, the IRS has launched two separate initiatives focused on high-income and high-net-worth taxpayer compliance, and it will be continuing to pursue these initiatives through the remainder of 2024 and into 2025. These initiatives are targeting:

• High-income and high-net-worth taxpayers who have not filed tax returns since 2017 with annual income (as indicated by W-2s, 1099s and other third-party filings) of $400,000 or more; and,
• High-income and high-net-worth taxpayers who have more than $1 million in income and more than $250,000 in recognized tax debt.

Of the $1.3 billion that the IRS has collected from these taxpayers over the past year, approximately $1.1 billion has come from just 1,600 taxpayers who owed an average of roughly $700,000. Another $172 million has come from roughly 21,000 taxpayers with unfiled returns.

What Should You Do if You Owe a Substantial Amount of Money to the IRS?

With these ongoing initiatives in mind, what should you do if you owe a substantial amount of money to the IRS? The short answer is that you should take a proactive approach to resolving your tax debt, though this can mean different things in different circumstances. While filing a delinquent return and paying the taxes (and interest and penalties) owed may be the best approach in some cases, high-income and high-net-worth taxpayers will often have other—and better—options available.

It is also important to keep in mind that disclosing past tax law violations on a delinquent return can be risky. Filing late does not insulate taxpayers from civil or criminal enforcement. As a result, even if you can easily afford to pay what you owe, it may still be in your best interests to consider an alternative such as voluntary disclosure.

Request an Appointment with Washington D.C. Tax Lawyer Kevin E. Thorn

If you need to know more about the IRS’s ongoing efforts to target high-income and high-net-worth taxpayers, we invite you to get in touch. To request an appointment with Washington D.C. tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, please call 202-349-4033 or contact us confidentially online today.