IRS Hauls Back $1.3 Billion From High-Income Earners
Certain income and wealth levels can trigger an IRS audit. Here's what you need to know.
IRS audits aren’t new and recent news is no exception. Due to an influx of funding from the Inflation Reduction Act (IRA), the federal tax agency has been cracking down on high-income and wealthy individuals who owe tax debt.
The compliance initiative targeting high-earning non-filers comes after an IRS warning for wealthy, high earners earlier this year. As Kiplinger reported, the IRS foretold increases in audits, levied penalties, and encouraged taxpayers to file their back taxes before the agency filed for them.
Now, six months later, the IRS has made good on its promise: expanded efforts to reclaim tax debts from high-earning, non-filing taxpayers are on the horizon.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Is the IRS cracking down on high-income earners?
If you earn between $400,000 and $1 million and still need to file a tax return, you may be chosen by the IRS for audit. The tax agency has found thus far:
- 1,600 individuals when the initiative began last fall
- An additional 125,000 non-filers in February
The agency also said it has prioritized individuals owing $250,000 or more in tax debt.
The IRS is looking as far back as 2017 for overdue taxes.
Before the IRA, the IRS cited underfunding and a lack of resources as reasons the agency couldn’t follow up on its initiative to pursue back taxes. Now billions in funding have made this compliance initiative a reality. The IRS reports that nearly 80% of the initially identified non-filers have now made a payment to the tax agency.
Will the IRS audit everyone? Last week, In a press conference in Austin Texas, the U.S. Treasury Department announced the launch of audits of “the 60 largest corporate taxpayers, with average assets of $24 billion.” The IRS will also audit “76 of the largest partnerships” and crack down on the “abuse of corporate jets for personal travel.”
This comes nearly 18 months after a rumor, spurred by some Congressional lawmakers, claimed that 87,000 IRS agents would be coming for your tax dollars. But, it turns out, only some of that is true. Instead of thousands of agents, only dozens are coming. And they’re prioritizing the wealthy and those with higher incomes.
How does the IRS find people who don’t pay taxes?
The agency received third-party information to isolate individuals owing tax debt. This includes documents like Forms W-2 and 1099. These IRS forms can indicate when there is reportable income but no corresponding taxpayer return.
Additionally, the IRS has assigned dozens of senior employees to track back tax cases to recoup lost revenue.
How do you pay back IRS taxes?
If you still need to file an old federal tax return, there is still time. The IRS has mailed out compliance alerts for failure to file a tax form, known as a CP59 notice.
If you’ve received a CP59 notice, you might want to consult a tax professional on filing back taxes. The IRS has provided resources on how to file a back return.
You can also make payments on past due returns via bank account, credit or debit card, and apply for a payment plan through the IRS website or your IRS online account.
You may want to ask a qualified and trusted tax professional about these options as well.
Related Content
- IRS Employees Owe $50 Million in Unpaid Taxes
- Red Flags for IRS Audit
- Audit Reveals IRS Has No Plan to Replace Old Tech
- Why Some States Won’t Get Direct File
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Kate is a CPA with experience in audit and technology. As a Tax Writer at Kiplinger, Kate believes that tax and finance news should meet people where they are today, across cultural, educational, and disciplinary backgrounds.
-
Stock Market Today: Markets Tumble on DeepSeek Shock
A cheap AI chatbot from China disrupted the biggest U.S. tech companies.
By Dan Burrows Published
-
Food, Gas Prices to Spike if Trump Levies 25% Tariffs on Canada and Mexico
Tariffs The neighboring countries are major exporters of fresh food, auto, gas, and industrial supplies to the U.S.
By Gabriella Cruz-Martínez Published
-
Ease the Tax Bite When You Tap Retirement Accounts
Savvy retirees tap retirement accounts with a tax plan. Each type of account may have different tax rules and rates, so know before withdrawing funds.
By John Waggoner Published
-
IRS Direct File 2025 Offers A New Way to File Taxes for Free
Tax Filing See if you qualify for this free IRS tax filing program since tax season begins January 27.
By Kate Schubel Last updated
-
Opportunities and Challenges When You Inherit an IRA
New SECURE 2.0 Act rules have kicked in to reshape distribution and taxes for inherited IRAs and retirement plans. Read on for strategies to help beneficiaries.
By Elizabeth Pappas, CPA Published
-
Getting Divorced? Beware of Hidden Tax Traps as You Divide Assets
Dividing assets fairly in a divorce means looking beyond their current values and asking whether they'll create tax liabilities — or tax breaks — in the future.
By Stacy Francis, CFP®, CDFA®, CES™ Published
-
Why Digitizing Your Tax Records Can Simplify Your Filing in 2025
Tax Records If you can, switching from paper to e-filing your taxes can have many benefits.
By Gabriella Cruz-Martínez Published
-
How to Avoid These 10 Retirement Planning Mistakes
Many retirement planning mistakes are easily avoidable. Here are 10 to have on your radar so you don't end up running out of money in your golden years.
By Romi Savova Published
-
Converting Retirement Savings to a Roth IRA? Don't Do This
You might want to convert all of your savings to a Roth in one go, but you could end up paying hundreds of thousands more in taxes than you have to.
By Joe F. Schmitz Jr., CFP®, ChFC® Published
-
Asset Protection for Affluent Retirees in 2025
Putting together a team of advisers to assist with insurance, taxes and other financial issues can help with security, growth and peace of mind.
By Derek A. Miser, Investment Adviser Published