What You Need to Know
- “Wealthy tax cheats are stealing billions from the American people,” Sen. Ron Wyden says.
- The IRS, which is short on resources, fails to collect much of this debt.
- Tax collectors could make significant progress by focusing on high earners owing the most.
Millionaires owe the Internal Revenue Service more than $2.4 billion in unpaid taxes, according to a just-released study by the Treasury Inspector General for Tax Administration.
The Treasury Department’s watchdog said Monday that it has previously reported that the IRS “does not consider the taxpayer’s income or wealth when prioritizing Taxpayer Delinquent Accounts, focusing instead on the dollar amount” of the balance due.
“This creates a higher risk that taxpayers with high incomes are not paying their tax debts even though they have the ability to pay,” the IG stated in its report, High-Income Taxpayers Who Owe Delinquent Taxes Could Be More Effectively Prioritized.
The watchdog reported that “with the IRS Collection function’s limited staffing of experienced revenue officers, it is important to determine if the IRS is effectively addressing nonpayment by high-income taxpayers.”
The IG identified 685,555 taxpayers who had a balance due as of May 14, 2019, who reported adjusted gross income (AGI) of $200,000 or more and owed a combined total of $38.5 billion.
“Because the IRS prioritizes high balance due … cases for collection, many of these high-income taxpayers would be included in high-priority work. However, balances due are not prioritized by incomes earned and some improvements could be made to prioritize high-income taxpayers more effectively,” the report stated.
A separate IRS analysis of 64,317 delinquent tax cases showed that the IRS collected less than half of tax debt owed by these high-income taxpayers within 52 weeks of assignment to Field Collection, the watchdog report said.