The Internal Revenue Service (IRS) has implemented new strategies under the Inflation Reduction Act to recover a larger share of taxes owed by large corporations and complex partnerships. To date, over half a billion dollars have been recouped through these new measures.
According to a press release by the U.S. Department of the Treasury, the IRS has begun prioritizing high-income cases to recover missed tax payments from previous years. The agency has struggled to keep pace with individuals and partnerships that evade tax payments due to more than a decade of budget cuts. The IRS has deployed numerous Revenue Officers to concentrate on high-end cases, defined as taxpayers who earned over $1 million in income and also had over $250,000 in acknowledged tax debt. This specific initiative has already enabled the IRS to collect $38 million from 175 different taxpayers within a short time frame.
The same press release states that 1,600 taxpayers have been identified as targets by the IRS. Together, they owe hundreds of millions of dollars in past taxes to the IRS. Of these 1,600 cases, 900 have already been addressed by Revenue Officers, resulting in approximately $482 million recovered from this group of taxpayers.
The press release further indicates that the IRS is tackling balance sheet discrepancies in partnerships with over $10 million in assets - an indication of potential non-compliance. The IRS initiated a program in September to address these discrepancies and has since issued 480 compliance alerts. Additionally, it is enhancing its Large Partnership Compliance program which scrutinizes complex partnership returns using artificial intelligence (AI). This program aims at identifying potential compliance risks in partnership tax, general income tax, accounting, and international tax areas and is being expanded to include more large partnerships.
Finally, according to the press release, the Inflation Reduction Department (IRD) is focused on recruiting more top talent to pursue these high-income individuals and corporations while also improving taxpayer service. The IRS extended job offers to over 560 skilled accountants in November and December, with the goal of attracting high-wealth individuals, complex partnerships, and large corporations that evade taxes. The IRS has updated its hiring processes and organized direct hiring events to compete with the private sector in attracting top-tier talent. In addition, the IRS is enhancing taxpayer service by facilitating various forms of interaction with the agency, including phone, in-person, and online interactions, and expanding in-person service to underserved and rural communities.
