IRS Intensifies Scrutiny on Millionaires, Hedge Funds, and Corporate Giants

Millionaires, major investment businesses, and multinational organizations with unpaid taxes are under closer scrutiny by the IRS. The IRS confirmed that it collected over half a billion dollars from high-income taxpayers with tax obligations of over a million dollars. The September program targets anyone earning over $1 million and having over $250,000 in tax debt.

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IRS Ramps Up Scrutiny on Tax-Delinquent Millionaires and Wealthy Entities

The IRS stated that 1,600 U.S. millionaires are tax delinquents as part of this increased focus. The department has given revenue officers over 900 instances to investigate. The IRS targets hedge funds, law firms, and real estate corporations suspected of tax evasion, as well as wealthy individuals.

Focusing on high-income taxpayers is cost-effective. The Joint Economic Committee of Democrats reports that auditing the wealthy may return $12 for every $1 spent.

Due to historically low audit rates for the wealthy, the IRS wants to change that. The IRS attributed its increased examination of high-income taxpayers to the 2022 Inflation Reduction Act, which provided greater resources for enforcement.

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IRS Targets Partnerships and Multinationals in Ongoing Tax Enforcement Efforts

The IRS is scrutinizing partnerships, particularly those involving rich investors and restricted participants in investment partnerships. The agency won a lawsuit over limited partners’ self-employment tax, setting a precedent for future audits.

The IRS also examines returns using AI, especially on large multinational firms with international operations. 180 subsidiaries have received compliance notifications to address suspected non-compliance. Early 2024 will see 60 more IRS audits of the top corporate taxpayers. The selection process will involve AI and IRS experts with cross-border tax and company expertise.

While the IRS spared $1 billion in fines for unpaid tax bills during the pandemic, it has resumed mailing “special reminder letters” to millions of Americans about their tax arrears. The diverse strategy shows the IRS’s dedication to tax compliance across sectors.

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