Rejuvenated IRS Is Cracking Down On Rich Tax Cheats & Improving Service, Proving Critics Wrong
Critics want voters to think investments are impossible to achieve–therefore not worth funding by taxing the rich.
By William Rice
Cynical opponents of fair taxes and the public services they pay for are working to undermine the broad support they both enjoy among the American people. The critics want voters to believe that efficient, effective government investments are impossible to achieve and therefore not worth funding through fairer taxes on the rich and corporations.
Fear is added to the mix when anti-government types try to fight adequate funding of the Internal Revenue Service. They conjure scary images of armed IRS agents kicking down the doors of innocent middle-class taxpayers. The goal is to distract from the reality that the tax agency has needed more resources for years to end an epidemic of tax evasion by wealthy individuals and multinational corporations, and to provide better service to honest taxpayers.
It was Republicans who starved the IRS of funding to make it easier for their rich friends and donors to evade paying what they owe, and to frustrate ordinary Americans with our tax system. President Biden and congressional Democrats responded nearly two years ago with an $80 billion infusion of funds as part of the Inflation Reduction Act.
And defying the predictions of all those cynics and scaremongers, that restored funding has been a rousing success.
The IRS has already collected nearly half a billion dollars in unpaid taxes from just 1,600 millionaires. It’s launched an effort to find out why 125,000 taxpayers—all of them with annual income over $400,000, a fifth of them with yearly income over $1 million—haven’t even bothered to file a return since 2017.
The IRS reinvigorated an existing audit of Microsoft, in which the agency claims the company owes almost $30 billion in back taxes because the company improperly channeled income through offshore entities. The IRS sent warning letters to 150 American subsidiaries of foreign corporations that the agency believes are failing to pay what they owe to the U.S., and launched scores of new audits of multi-billion-dollar domestic firms.
On the service front: for the tax season just ended the IRS had 5,000 more employees answering phones, which meant almost 90% of taxpayer calls were answered (pre-funding, it was just 10%). The average time on hold was three minutes, compared to almost half an hour two years ago. The agency also set up almost 250 more in-person help centers, including some open on Saturdays.
The most ambitious customer-service initiative this year was a pilot program in 12 states that allowed taxpayers to file simple returns directly with the IRS for free. Over 140,000 Americans took advantage of Direct File, with the number accelerating towards the end of the filing season as more taxpayers became aware of the program. Participants saved an estimated $5.6 million in fees they would have otherwise paid the for-profit tax preparation industry.
A coalition of public-interest advocates (including Americans for Tax Fairness) is now urging the IRS to expand and improve the system for next year, allowing more taxpayers with a wider variety of returns to take advantage of it.
The IRS commissioner estimates that millionaires and billionaires evade $150 billion in taxes they legally owe each and every year. If we collected all that was owed it would be enough to make multiple combinations of public investments in healthcare, childcare, education, housing and more. All without raising a single extra nickel in taxes.
It's no wonder that the rich folks who like to evade their taxes and don’t like to invest in working families try so hard to discredit the IRS. But it’s hard to argue with success.