IRS has collected $1.3 billion from wealthy taxpayers by ramping up enforcement

Washington (CNN) — The Internal Revenue Service said Friday that it has collected nearly $1.3 billion in overdue taxes from wealthy households since last fall, thanks to a ramp-up of enforcement efforts funded by the Democrat-backed Inflation Reduction Act that passed Congress two years ago.

The Trump campaign has claimed the federal investment is an example of reckless spending that has taken place under President Joe Biden and Vice President Kamala Harris.

“Harris was the tie-breaking vote for the Inflation Reduction Act in the Senate, which not only further spiked inflation, but led to a massive expansion of the IRS with an additional $80 billion to hire 87,000 new agents,” Trump campaign senior adviser Brian Hughes said on a call with reporters Thursday.

That number of agents is a misleading figure, often repeated by Republicans, based on a report about how many total employees could be hired with the money rather than actual auditors focused on enforcement.

The Biden administration has said that increased enforcement actions will only target wealthy taxpayers who earn more than $400,000 a year, as well as corporations. Plus, the independent Congressional Budget Office and other budget experts say that spending money on tax enforcement can reduce the deficit by bringing in more tax revenue.

Friday’s announcement is the latest of several made by IRS officials over the past year that highlight how the agency is using money from the Inflation Reduction Act to ensure wealthy people are paying the taxes they owe, as well as improving taxpayer services.

As part of its enforcement campaign, the IRS has identified 125,000 people who earn at least $400,000 a year but have not filed federal income taxes since 2017. Over the past six months, the IRS has reached out to those taxpayers and recouped $172 million from them.

The IRS is also targeting about 1,600 millionaires with more than $250,000 in tax debt that they have not paid. Nearly 80% of those taxpayers have now made a payment, resulting in $1.1 billion recovered.

The IRS has also used the Inflation Reduction Act funding to improve the IRS’ phone service, digitize paper files and create a free, direct tax filing system.

Since the Inflation Reduction Act passed, Republican lawmakers have made several attempts to claw back the $80 billion that the legislation provided for the IRS.

In a deal to address the debt ceiling and avoid a US default last year, Democrats agreed to allow for $20 billion to be rescinded. And in January, Democrats conceded an acceleration of the $20 billion cut in an effort to get a full-year federal spending law passed in time to avoid a partial government shutdown.

The Inflation Reduction Act included money for a number of Democratic priorities, including climate provisions and a cap on insulin for Medicare beneficiaries. At the time, the independent Penn Wharton Budget Model said the spending package would have only a “very modest impact on inflation” over the next decade.

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