Executive Summary
The U.S. Department of the Treasury and the Internal Revenue Service (IRS) have made significant strides in their initiatives under the Inflation Reduction Act. These efforts have led to the recovery of $1.3 billion from high-income, high-wealth individuals and improved taxpayer services via the Digital First Initiative. Additionally, the IRS has made headway in modernizing its 65-year-old foundational technology to enhance taxpayer services and secure taxpayer data.
$1.3 Billion Recovered by IRS from High-Income Taxpayers Through New Initiatives
The U.S. Department of the Treasury and the Internal Revenue Service (IRS) have recently announced recoveries totaling $1.3 billion from high-income, high-wealth individuals. This significant achievement is a result of the initiatives under the Inflation Reduction Act, aimed at ensuring these wealthy individuals meet their tax obligations.
Earlier this year, the IRS launched a determined effort to pursue 125,000 high-income taxpayers who had not filed their tax returns since 2017. With the funding provided by the Inflation Reduction Act, the IRS was able to ramp up its operations which had been sporadic since 2016 due to budget and staff limitations. As a result of this initiative, approximately 21,000 taxpayers have filed their returns, leading to a recovery of $172 million in taxes.
Furthermore, in the fall of 2023, an initiative was launched to pursue individuals who failed to pay recognized tax debt. This initiative focused on taxpayers with an income of over $1 million and a recognized tax debt of more than $250,000. The efforts have been successful, with $1.1 billion recovered from nearly 80% of these delinquent taxpayers.
In addition to ensuring tax compliance from high-income individuals, the IRS has also worked to improve taxpayer service through the “Digital First Initiative.” This initiative is aimed at offering taxpayers a modern online experience akin to what they would receive from their bank or financial institutions.
Leveraging the resources from the Inflation Reduction Act, the IRS has launched a plethora of digital tools and enhancements that improve the overall taxpayer experience. These include updates to the “Where’s My Refund?” tool and the introduction of a free filing tool called “Direct File.” These tools reduce the need for paper processes and phone calls, thereby relieving the burden on IRS employees and improving taxpayer service.
The IRS is also making strides in modernizing its foundational technology, which is over 65 years old. It has achieved a significant milestone by transitioning its outdated Assembly-based codebase to Java, a more modern and sustainable language. The new technology, called the Integrated Tax Processing Engine (ITPE), runs concurrently with the old system to ensure accuracy and data integrity.
In conclusion, the initiatives under the Inflation Reduction Act have not only resulted in significant tax recoveries from high-income, high-wealth individuals but have also improved taxpayer service through digital enhancements and technology modernization. These efforts underline the commitment of the U.S. Department of the Treasury and the IRS to hold individuals accountable for their tax obligations while improving the overall taxpayer experience.
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