{"id":58478,"date":"2023-09-08T09:43:11","date_gmt":"2023-09-08T13:43:11","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/irs-will-pursue-1600-millionaires-who-owe-back-taxes-promising-sweeping-and-historic-changes\/"},"modified":"2023-09-08T09:43:13","modified_gmt":"2023-09-08T13:43:13","slug":"irs-will-pursue-1600-millionaires-who-owe-back-taxes-promising-sweeping-and-historic-changes","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=58478","title":{"rendered":"IRS will pursue 1,600 millionaires who owe back taxes, promising \u2018sweeping and historic changes\u2019"},"content":{"rendered":"<div id=\"js-article__body\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0002481865\" role=\"document\">\n<p>The Internal Revenue Service is going after hedge funds, large law firms, partnerships and more millionaires as its compliance clampdown continues, the tax agency\u2019s commissioner said.<\/p>\n<p>One year after Congress approved billions in extra funding for the IRS to improve operations and revive high-end tax enforcement that flagged during the past decade, the agency is now getting specific about where it\u2019s planning to make sure it\u2019s collecting all taxes due.<\/p>\n<div class=\"paywall\">\n<p>The IRS is also refining its methods for spotting enforcement targets: by using artificial intelligence, in certain cases. <\/p>\n<p>The IRS has its eyes on approximately 1,600 millionaires who owe at least $250,000 apiece in tax debt. All together, they owe \u201chundreds of millions of dollars,\u201d Werfel said. The agency said in July that it\u2019s already collected $38 million in back taxes from 175 millionaire taxpayers.<\/p>\n<p>\u201cThese are sweeping and historic changes that will alter the landscape of our compliance work,\u201d IRS Commissioner Danny Werfel told reporters Thursday evening.<\/p>\n<div data-layout=\"inline\n                \" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetPullQuote\n            inline\n    scope-web|mobileapps\n  article__inset\n          article__inset--type-InsetPullQuote\n            article__inset--inline\n  \"><\/p>\n<p>          <!-- eventually when we know what this card will be we can change it and leave this one --><\/p>\n<div class=\"wsj-article-pullquote article__inset__pullquote \">\n<p class=\"pullquote-content article__inset__pullquote__quote\">\n        <span class=\"l-qt article__inset__pullquote__mark--left\">\u201c<\/span>\u2018These are sweeping and historic changes that will alter the landscape of our compliance work.\u2019<span class=\"r-qt article__inset__pullquote__mark--right\">\u201d<\/span>\n      <\/p>\n<p>        <small><br \/>\n          <span class=\"inset-author article__inset__pullquote__author\">\u2014 IRS Commissioner Danny Werfel <\/span><br \/>\n        <\/small><\/p><\/div>\n<\/p><\/div>\n<p>Audit rates by the increasingly short-staffed and cash-strapped IRS have been dropping in recent years for all income levels, but particularly for extremely rich taxpayers.<\/p>\n<p>There\u2019s a range of estimates on the gap between taxes owed and actually paid. In 2021, Werfel\u2019s predecessor Charles Rettig said it could be as large as $1 trillion each year because the tax agency didn\u2019t have the resources to dig into many complex returns.<\/p>\n<p>The IRS\u2019s latest announcement is the agency\u2019s latest attempt to narrow that gap.<\/p>\n<p>There will also be a fresh batch of audits for 75 large partnerships, Werfel said. These entities include hedge funds, real-estate investment partnerships, publicly traded partnerships and large law firms.<\/p>\n<p>The organizations \u2013 each averaging $10 billion in assets \u2013 will be told of the audits in the coming weeks, Werfel said.<\/p>\n<p>These types of audits are complicated, and even after examination an audit can result in no change for the tax bill. IRS officials are betting these reviews will reap extra tax revenue after using artificial intelligence to spot suspicious patterns and trends.<\/p>\n<p>The IRS doesn\u2019t know how much it could collect from these partnerships and the process could be lengthy and litigious, Werfel said. \u201cBut we absolutely believe this is the right thing to do to make sure there is tax fairness,\u201d he said.<\/p>\n<p>Starting next month, the IRS will also mail out letters to around 500 partnerships that are worth at least $10 million. The IRS has questions about their balance sheets and if the agency isn\u2019t satisfied with answers, more audits may follow.<\/p>\n<p>The IRS is also stepping up scrutiny for taxpayers with cryptocurrency holdings and foreign bank accounts, Werfel said.<\/p>\n<p>The Inflation Reduction Act, which was enacted in August 2022, included $80 billion to upgrade staffing and raise the number of audits for businesses and rich taxpayers. The money will not be used to increase enforcement on households making under $400,000, Biden administration officials said.<\/p>\n<p>In wrangling to raise the debt ceiling earlier this year, the White House agreed with Republican negotiators to redirect $20 billion of that $80 billion.<\/p>\n<p>Friday\u2019s enforcement announcements are concrete next steps for an agency that\u2019s eager to show how it\u2019s planning to use the money to upgrade \u2014 especially as negotiations continue over its annual base budget.<\/p>\n<p>The audits require staff with the skills to sift through complex returns. But the IRS still has a long way to go to have the people ready for the task, a recent watchdog report showed.<\/p>\n<p>The agency\u2019s Large Business and International Division had a net loss of 82 revenue agents during fiscal year 2023, when 97 departing agents exceeded 15 new hires, according to a report from the Treasury Inspector General for Tax Administration.<\/p>\n<p>In the agency\u2019s Small Business\/Self-Employed Division, there was a net loss of 186 revenue agents, the report said this week.<\/p>\n<p>The IRS aims to get back to a 90,000 full-time-employee headcount, which it hasn\u2019t been at in more than a decade, Werfel noted.<\/p>\n<p>The first hiring burst included 5,000 customer-service assistants, and extra audit staff is the next step, Werfel said. Meanwhile, he said the agency is also shifting staff to higher-end audits while the hiring effort continues.<\/p>\n<p>\u201cWe have more work to do in hiring exam personnel. On that front, it\u2019s going to be a very busy fall for us,\u201d he said.<\/p>\n<\/p><\/div>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.marketwatch.com\/story\/irs-will-pursue-1-600-millionaires-who-owe-back-taxes-promising-sweeping-and-historic-changes-5b2301fb?mod=personal-finance\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Internal Revenue Service is going after hedge funds, large law firms, partnerships and more millionaires as its compliance clampdown continues, the tax agency\u2019s commissioner said. One year after Congress approved billions in extra funding for the IRS to improve operations and revive high-end tax enforcement that flagged during the past decade, the agency is [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":58479,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[236],"tags":[83],"class_list":["post-58478","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-news","tag-featured","post_format-post-format-gallery"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>IRS will pursue 1,600 millionaires who owe back taxes, promising \u2018sweeping and historic changes\u2019 | iFintechWorld<\/title>\n<meta name=\"description\" content=\"The Internal Revenue Service is going after hedge funds, large law firms, partnerships and more millionaires as its 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