The IRS just hit a major milestone. The agency has recovered over $1.3 billion from high-income, high-wealth Americans who owed taxes but never paid up. But with massive staff cuts now underway, the future of this crackdown hangs in the balance.
How the IRS Pulled Off the $1 Billion Tax Recovery
2 The U.S. Department of the Treasury and Internal Revenue Service announced that a new initiative to collect past-due tax debt from high-income, high-wealth individuals reached a major milestone, with more than $1 billion recovered. 2 The IRS in 2023 launched the initiative to pursue high-income, high-wealth individuals who have failed to pay recognized tax debt, with dozens of senior employees assigned to these cases. 2 The campaign targeted taxpayers with more than $1 million in income and more than $250,000 in recognized tax debt.
The initial results were modest. 2In an early success, the IRS collected $38 million from more than 175 high-income, high-wealth individuals. Then the numbers grew fast.
2 The IRS expanded this effort to 1,600 additional high-income, high-wealth individuals, assigning more than 1,500 of these cases to senior employees. By July 2024, the total crossed the $1 billion mark.
3By September 2024, roughly 80% of those 1,600 millionaires with overdue taxes had paid up, providing an additional $1.1 billion in taxes, an increase of $100 million since July.
IRS tax enforcement wealthy millionaires unpaid taxes recovery
The Inflation Reduction Act Made It Possible
None of this would have happened without the 2022 Inflation Reduction Act. 6
2 Prior to the Inflation Reduction Act, more than a decade of budget cuts prevented the IRS from keeping pace with increasing complexity and ensuring that wealthy taxpayers, large corporations, and complex partnerships pay taxes owed under current law.
Here is a snapshot of what that funding unlocked:
- 2 A campaign to collect taxes owed by 125,000 high-income, high-wealth earners who have not filed taxes in years.
- 2 Audits of 76 of the largest partnerships with average assets of $10 billion, including hedge funds, real estate investment partnerships, publicly traded partnerships, and large law firms.
- 2 Audits of the 60 largest corporate taxpayers, with average assets of $24 billion.
- 2 A new regulatory initiative to close a major tax loophole exploited by large, complex partnerships that could raise more than $50 billion in revenue over 10 years.
5 In the first six months of the non-filer initiative alone, nearly 21,000 wealthy taxpayers filed returns, leading to $172 million in taxes being paid.
The numbers speak for themselves. 15With the additional funding, the IRS made remarkable progress in the 2024 fiscal year, securing nearly $100 billion through audits of filed tax returns. 15This represented an additional $25 billion in revenue from audits compared with the year before the agency’s budget boost.
The Staggering Scale of America’s Tax Gap
The bigger picture is even more alarming.
30 The projected annual gross tax gap for tax year 2022 is $696 billion. That is the difference between what Americans owe in federal taxes and what they actually pay on time. 28 Academic researchers suggest that more than $160 billion lost annually is from taxes that the top 1% choose not to pay.
Key stat: 34One paper estimates that the top 1% of earners are responsible for nearly 30% of unpaid taxes, totaling about $205 billion annually.
7 Treasury Secretary Janet Yellen noted in a 2024 speech that in 2019, the top 1% of wealthy Americans owed more than one-fifth of all unpaid taxes. She was blunt about what that means for everyone else.
Working families who pay their taxes on time are essentially covering for millionaires who don’t.
10 The audit rate for taxpayers earning $1 million or more was just 0.7% in 2019, the most recent data available, compared with 7.2% in 2011. That steep drop gave wealthy tax cheats a decade-long window to avoid paying what they owed. 32 According to the Treasury, audit rates on millionaires fell by more than 70% from 2010 to 2019, and the audit rate on large corporations fell by more than 50% over the same period.
DOGE Cuts Now Threaten to Undo the Progress
Just as the IRS was showing real results, the agency is being gutted.
23 A report from the Treasury Inspector General for Tax Administration revealed that the IRS lost 31% of its auditors due to buyouts and layoffs tied to Elon Musk’s Department of Government Efficiency initiative. 23 This significant reduction affected over 3,600 revenue agents, alongside 18% of revenue officers and 10% of tax examiners. 25 President Trump and DOGE have executed massive cuts to the IRS workforce, including a plan to reduce IRS employee headcount by 40%. 25 The IRS division that audits billionaires and the ultrawealthy has already lost 38% of its employees and had its funding rescinded.
| What Was Lost | Impact |
|---|---|
| 31% of auditors | Fewer high-income audits |
| 38% of ultra-wealth division staff | Billionaire audits at risk |
| 40% target workforce cut | Broad enforcement decline |
| 15IRA funding reduced from $80B to $60B | Fewer resources for modernization |
Tax experts are sounding the alarm. 20Chye-Ching Huang, executive director of NYU’s Tax Law Center, called the layoffs “misguided” and said they “will hurt everyday Americans who pay their taxes.”
34 According to Yale Budget Lab analysis, a 50% cut of the agency workforce could cost $2.4 trillion over the course of the decade and result in around a 25% increase in the tax gap.
What This Means for Everyday Taxpayers
For average Americans earning under $400,000 a year, nothing was supposed to change. 2The enforcement initiatives were consistent with Secretary Yellen’s commitment to not increase audit rates for Americans making less than $400,000 a year.
15 For most Americans, the likelihood of an audit remains unchanged at about 0.3% for taxpayers earning below $400,000.
But the workforce cuts flip the script. 18Lower-income taxpayers who claim the Earned Income Tax Credit continue to face relatively high audit rates because those audits are simpler and cheaper to conduct. The result is a system that, by default, becomes more regressive as it shrinks.
When the IRS loses the skilled agents who chase wealthy tax evaders, the burden falls harder on working families. That is not opinion. It is math.
22 The IRS is one of the few parts of the federal government that generates far more revenue than it costs to operate. According to estimates from the Congressional Budget Office and the Treasury Department, every additional dollar spent on IRS enforcement yields multiple dollars in recovered tax revenue. 15 In fiscal year 2024, the IRS spent only 34 cents for every $100 collected through audits.
The $1.3 billion recovered from millionaire tax dodgers proved something important. When the IRS has the tools and people it needs, it can collect what is owed. That money belongs to the public. It funds schools, roads, defense, and healthcare. The question now is whether America will keep investing in the agency that brings that money home, or walk away from billions in unpaid taxes. If you have thoughts on this, drop them in the comments below.
