Recent enforcement activity has resulted in the IRS recovering $4.7 billion in back taxes and proceeds, the agency said on Dec. 12, as the threat of additional budget cuts from Republicans and a potential new leader of the IRS loom once Donald Trump takes office next month and both chambers of Congress are controlled by the GOP.
In a quarterly update on its strategic operating plan, the IRS said on Thursday that $1.3 billion was collected from high-income, high-wealth individuals who haven’t paid overdue tax debt or filed tax returns, $2.9 billion was recovered related to IRS Criminal Investigation (IRS-CI) work into tax and financial crimes, including drug trafficking, cybercrime, and terrorist financing, and $475 million in proceeds were collected from criminal and civil cases attributable to whistleblower information.
The IRS also announced new results from its focus on high-income nonfilers who have not filed taxes since 2017. The agency said it has now collected an initial $292 million from more than 28,000 nonfilers, an increase of $120 million since September 2024. These are cases where the IRS has received third-party information—such as through forms W-2 and 1099s—indicating these people received income between $400,000 and $1 million or more than $1 million but failed to file a tax return.
The nonfiler program had run sporadically since 2016 due to severe budget and staff limitations that didn’t allow these cases to be pursued, according to the IRS, but since receiving funding from the Inflation Reduction Act of 2022, the agency said it was able to resume core tax administration work earlier this year.
During its 2024 fiscal year, IRS-CI identified more than $9.1 billion in fraud, obtained court orders totaling $1.7 billion in restitution to U.S. taxpayers, and seized criminal assets totaling approximately $1.2 billion.
In FY 2024, the IRS paid awards totaling $123.5 million to whistleblowers for aiding in the collection of $474.7 million in proceeds on cases that included unreported/underreported income, hidden offshore assets, overstated deductions, general allegations of tax fraud, and abusive international transactions.
“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.
Werfel’s time as commissioner is being threatened by President-elect Trump’s recent nomination of former Missouri congressman Billy Long to replace him at the agency, even though Werfel’s term doesn’t end until November 2027. Werfel declined to answer questions about Long’s nomination during a press briefing today, according to published reports.
Long served as a representative from Missouri from 2011 to 2023, a stint that included work on the House Energy and Commerce Committee and the Transportation and Infrastructure Committee.
In a Dec. 4 post on his Truth Social platform announcing the pick, Trump wrote, “Since leaving Congress, Billy has worked as a Business and Tax advisor, helping Small Businesses navigate the complexities of complying with the IRS Rules and Regulations. Taxpayers and the wonderful employees of the IRS will love having Billy at the helm.”
During his first administration, Trump didn’t fire then-IRS Commissioner John Koskinen, despite Koskinen often being at odds with House Republicans, allowing his term to end. Trump then nominated Charles Rettig, a California tax attorney to serve as IRS commissioner. Rettig served in that post from 2018 to 2022.
Funding the IRS received through President Joe Biden’s signature bill, the Inflation Reduction Act, is also under attack by Republicans. The agency was allotted roughly $79.6 billion spread out over 10 years from the legislation to modernize its business systems, improve taxpayer services, hire new employees, and to bolster tax enforcement.
However, that funding has been slashed to about $57.8 billion as a result of deals between the Biden administration and Republican lawmakers. Approximately $1.4 billion of that Inflation Reduction Act funding was rescinded as part of debt ceiling negotiations last year, and another $20.2 billion was cut and repurposed as part of the agreement in June 2023 between Biden and then-House Speaker Kevin McCarthy to suspend the debt limit and cap federal agency spending.
Last month, officials from the Treasury Department called on Congress to unlock $20 billion in IRS enforcement money that is currently tied up in legislative language that has effectively rendered the money frozen.
The $20 billion in question is separate from the $20 billion rescinded from the IRS last year. However, the legislative mechanism keeping the government afloat inadvertently duplicated the one-time cut, according to the Associated Press.
Treasury officials warn of dire consequences if the funding is effectively rescinded through inaction.
“Ultimately, unless Congress provides the IRS with certainty with regard to resources in the near term, you could see a dramatic fall-off in our ability to do the two things that I think matter most, which is raise revenue—especially from those people who are not paying on a regular basis, wealthy individuals and corporations—but also a dramatic fall-off in customer service,” said Deputy Treasury Secretary Wally Adeyemo.
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Tags: Income Tax, IRS, Legislation, Taxes
