The taxpayers are part of a group of high-income earners which the agency has targeted for owing hundreds of millions in back taxes.
The IRS collected $160 million as part of its increased compliance efforts targeting wealthy taxpayers as concerns mount that such efforts could eventually target small-business owners.
Earlier this year, the IRS collected $38 million from more than 175 high-income earners. On Oct. 20, the agency announced it had collected $122 million from 100 more high-income earners, taking the total tax collected from taxpayers to $160 million, according to a statement. The 100 taxpayers are part of the 1,600 new high-income earners the IRS is contacting who “owe hundreds of millions of dollars in taxes.”
The IRS cited three cases of such taxpayers. One taxpayer who owed taxes was ordered to pay more than $15 million last month. He had falsified millions of dollars of personal expenses as deductible business expenses. This falsified amount was used to fund the construction of a 51,000-square-foot mansion, including an outdoor pool and pool house and tennis, basketball, and bocce courts. The taxpayer also falsified millions of dollars of expenses for luxury vehicles, country club memberships, artwork, and homes for his children.
Another individual recently pleaded guilty to filing false tax returns and skimmed more than $670,000 from his business, according to the agency. The individual also spent $502,000 on gambling and $110,000 on personal expenses.
A third individual fraudulently obtained $5 million in COVID-19 relief loans for a sham business and then spent the money to fulfill personal needs, buying multiple cars, including a Lamborghini and a Ferrari. This person was sentenced to 54 months in federal prison.
The IRS credited these tax collection efforts to funding from the Inflation Reduction Act (IRA), which was enacted last year. The IRA had initially set aside $80 billion for the IRS, an amount later reduced to $60 billion.
“Prior to the Inflation Reduction Act, more than a decade of budget cuts prevented the IRS from keeping pace with the increasingly complicated set of tools that the wealthiest taxpayers use to hide their income and evade paying their share,” the tax agency said. “The IRS is now taking swift and aggressive action to close this gap.”
Although the IRS claims that its increased tax compliance and enforcement actions are aimed at making wealthy taxpayers pay their due share, Sen. Joni Ernst (R-Iowa) has questioned such claims.
In an April 18 letter to IRS Commissioner Daniel Werfel, for example, Ms. Ernst pointed out that the IRA funding over 10 years was aimed to “enhance collections efforts toward American taxpayers and increase the IRS workforce to over 105,000 employees by 2025.”