The Internal Revenue Service (IRS) has announced that it has recouped $4.7 billion in back taxes and proceeds from a wide range of crimes, bolstered by new tax enforcement initiatives and hiring, made possible by billions of dollars in extra funding through the 2022 Inflation Reduction Act (IRA).
The agency’s enforcement arm received a significant boost from the $80 billion in new IRA funding, though around $20 billion of this was later clawed back. Roughly $46 billion of the extra funding was earmarked for enforcement, a contentious part of the package that drew opposition from some Republican lawmakers, who argued it could lead to increased tax audits on lower- and middle-income Americans.
The IRS, which has promised not to increase audit rates for people making less than $400,000 per year, focused its Dec. 12 enforcement update on its efforts to target wealthy taxpayers and those who commit financial crimes. Key recoveries announced by the IRS include $1.3 billion from high-income taxpayers who failed to pay overdue tax debts, as well as $2.9 billion related to criminal investigations into drug trafficking, cybercrime, and terrorist financing.
The IRS acknowledged the critical role played by informants in its enforcement activities. In fiscal year 2024, the agency paid $123.5 million in rewards to whistleblowers who provided information, leading to $474.7 million in recoveries from unreported income, hidden offshore assets, and abusive tax practices.
Additionally, the agency has collected $292 million from over 28,000 high-income non-filers who had not submitted tax returns since 2017—an increase of $120 million since September.
The IRS’s Criminal Investigation (IRS-CI) division, the agency’s armed enforcement wing, was singled out in the release for its activity. In fiscal year 2024, IRS-CI uncovered over $9.1 billion in fraudulent activities, secured court-ordered restitution of $1.7 billion, and confiscated criminal assets valued at approximately $1.2 billion.
In the Dec. 12 announcement, the IRS also highlighted advancements in digital tools and taxpayer services, including redesigned taxpayer notices and enhanced access to tax transcripts in Spanish.
“The IRS continues to show dramatic progress on a wide array of the agency’s transformation efforts, producing real-world improvements to help taxpayers and businesses while also taking important steps in the law-enforcement and compliance arena to protect billions from ongoing schemes, ensure high-income individuals file returns and pay their taxes and penalties, and battle everything from terrorist financing to drug traffickers,” IRS Commissioner Danny Werfel said in a statement recapping the thrust of the agency’s quarterly update.
In this regard, the trajectory of Werfel’s service as IRS commissioner could mirror that of FBI Director Christopher Wray, who recently announced he would resign as head of the agency before Trump assumes office in January 2025, even though his term doesn’t sunset until 2027. Wray’s decision came after the president-elect nominated Kash Patel as the new FBI director.
