Millions in Back Taxes Already Raked in Following IRS Crackdown

Nov 28, 2023 | Blog

Tax lawyers in San Jose have learned that millions of back taxes have already been collected after the recent crackdown by the IRS on rich tax cheats. The Internal Revenue Service stated that its more stringent approach to tax enforcement has begun paying off already, and high-end filers who have cheated in past years are now paying the piper.

Quick Results After Promise to Make Tax Cheaters Pay

A little over a month after the IRS declared it would crack down on 1,600 wealthy Americans who are delinquent on their taxes, it announced that a total of $122 million has been collected. This total came from approximately 100 of the original 1,600 filers the IRS targeted. This figure is in addition to the original $38 million the agency already collected from 175 millionaires it previously targeted.

According to IRS Commissioner Danny Werfel, the grand total raked in from these aggressive measures, which combines the two amounts listed above, is $160 million.

Werfel told reporters that these totals are a good indicator of how much money is “on the table.” He highlighted how the IRS used money from the Inflation Reduction Act to reach these goals: Last summer, the Tax and Climate Package was enacted, and billions were designated for the IRS to overhaul many facets of its operations. Although this included the enhancement of customer service, a significant amount of money also went toward enforcement, with a specific target of major businesses and wealthy filers who previously cheated on their tax returns.

Substantial Amounts Recouped from Criminal Cases

Tax audit attorneys were likely busy during this initiative, since much of the recouped money came from guilty pleas in criminal cases or orders of restitution at trials. For example, the Treasury Department said that in one case, restitution was ordered for someone who had deducted $15 million in business expenses, when the money was actually spent on building an opulent personal dwelling.

IRS tax lawyers have learned that another individual skimmed over $670,000 through a fraudulent tax return, then allegedly used over $500,000 of the money at a gambling establishment. Prior to the new aggressive measures, the IRS estimated that the gap between taxes paid by cheaters and the amounts truly owed was somewhere in the neighborhood of $688 billion.

IRS Officials Also Targeting Corporate Taxes

Beginning in 2024, the IRS is initiating audits of major corporations, and, according to Werfel, 60 businesses are on a special list to be targeted first. Werfel mentioned that on average, these corporations make more than $525 million per year in taxable income, and have an average of $24 billion in assets.

It remains to be seen whether these businesses will need a tax attorney for ERC claims or a back taxes attorney, but there is no doubt they are distinctly in the crosshairs of the IRS.

Additional Alerts Going Out in 2024

According to Werfel, the IRS also plans to send about 150 alerts to United-States-based subsidiaries of foreign corporations based on concerns that they are failing to report the total amount of income generated in the states, which is subject to US taxation. Werfel stated that these alerts are meant to encourage these organizations to self-correct before the IRS begins auditing.

It’s wise for business owners or individuals who have tax problems to seek the advice of a professional TaxHelpers in San Jose, rather than find themselves in deeper trouble in coming months and years.