IRS has collected $160 million in back taxes by cracking down on millionaires

The Internal Revenue Service has collected $160 million in back taxes this year by cracking down on millionaires who haven’t paid what they owe, the agency said Friday.

The recent effort to target high-income individuals has been boosted by an increase in federal funding provided by Democrats last year through the Inflation Reduction Act. Republicans have criticized the amount of money the IRS is getting, and future funding is uncertain.

In September, the IRS started seeking back taxes from about 1,600 taxpayers with income above $1 million and more than $250,000 in tax debt. So far, the IRS has closed 100 of those cases, collecting $122 million, it said Friday.

Earlier this year, the IRS collected $38 million from more than 175 high-income earners. That brings the total to $160 million so far this year.

“I think that the evidence that we’ve seen to date, in terms of the amount that we have recovered … points to this being a highly important effort for us,” IRS Commissioner Danny Werfel said on a call with reporters.

In one successful case, an individual was ordered to pay more than $15 million in restitution last month for falsifying personal expenses as deductible business expenses, including the construction of a 51,000-square-foot mansion complete with an outdoor pool and pool house, as well as tennis, basketball and bocce courts, according to an IRS press release. The person also falsified expenses for luxury vehicles, artwork, country club memberships and homes for his children.

Another individual pleaded guilty last week to filing false tax returns and skimming more than $670,000 from his business. The person spent $110,000 on personal expenses and $502,000 on gambling, the IRS said.

The agency’s effort to ramp up enforcement aims to narrow what’s known as the “tax gap,” the difference between the amount…