IRS Collects $1 Billion from Individuals in 4 Months

Audio version available here (2 min.)

If you have an outstanding balance with the IRS, or you engage in shady tax practices, it’s time to reconsider your actions. Since the IRS announced its effort to hold individuals accountable for their outstanding tax liability in February, it has collected a whopping $1 billion.

How did the IRS collect so much in such a short time? Ever since the IRS received $80 billion in funding from the Inflation Reduction Act, it has ramped up all sorts of compliance efforts across multiple demographics. In this instance during spring of 2024, the IRS focused on individuals who failed to file their tax returns since 2017 and owed more than $250,000 in outstanding tax debt. Thousands of letters were sent out in early March as part of the effort, and then collections of outstanding tax and penalty balances were initiated from the IRS’s knowledge of individuals’ income through W-2 and 1099 income reporting forms. The IRS receives these reports regardless of a taxpayer actually filing their tax return, so any income you are paid is traceable.

In terms of overall outstanding taxes, $1 billion hardly chips at the $688 billion tax gap, but it does prove that the IRS is taking this effort seriously. This recent focus on individuals is not the only effort the IRS has initiated. Since September of 2023, the IRS is also scrutinizing “abusive use of partnerships…activities involving large corporations and partnerships…[and] aircraft use”.

IRS Commissioner Danny Werfel has pledged that compliance efforts will continue and “‘ramp up in the months ahead’”. To avoid being targeted, you’ll need to take action before the IRS. File your tax return if you haven’t already, and pay any outstanding balances you may have. It will take effort, but making sure you are in compliance is vital.

The best way to ensure you won’t have to face further trouble is by working with a tax professional. Remember, compliance is the goal here, and any misstep could result in the IRS targeting you. If you do not have a tax pro you can trust, reach out to XQ CPA for guidance. Our primary effort is to help you, regardless of the tax situation you may find yourself in. We are here for you.

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Sources:

https://www.irs.gov/newsroom/irs-tops-1-billion-in-past-due-taxes-collected-from-millionaires-compliance-efforts-continue-involving-high-wealth-groups-corporations-partnerships