According to Internal Revenue Service Commissioner Danny Werfel, tax evasion by America’s millionaires and billionaires tops $150 billion annually, draining government coffers and creating unfairness in the tax system.

The ​IRS ​​has launched ​sweeping ​new efforts ​to crack ​down ​on ​tax evasion by ​wealthy ​individuals ​and large ​corporations​​. 

With billions in new funding from Congress, the agency is aggressively auditing those with the most complex returns to ensure all high-income taxpayers pay their fair share.

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• Through expanded audits, the IRS is cracking down on $150 billion in annual unpaid taxes by millionaires and billionaires.

• Utilizing ​​new ​funding​, ​advanced ​analytics, ​and ​AI ​to ​pinpoint prime ​targets ​like ​private jets ​and large ​partnerships​​.

• Per IRS Commissioner Werfel, the efforts aim to close the “tax gap” and ensure wealthy taxpayers pay their fair share.

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IRS Cracks Down on Tax Evasion by Wealthy, Targeting $150 Billion in Unpaid Taxes Annually

Massive Tax Gap from Millionaires and Billionaires

Werfel stated in an exclusive CNBC interview that the annual IRS “tax gap” – taxes 

owed but not paid – by millionaires and billionaires who underreport income or don’t file at all totals $150 billion.

“There is plenty of work to be done,” Werfel said. 

This ​enormous ​tax ​gap ​contributes ​heavily to growing ​​federal ​deficits ​while ​eroding fairness ​in ​the ​tax ​​system.

Audits of taxpayers earning over $1 million plunged by over 80% in the past decade, while the number of millionaire taxpayers rose 50%. 

During ​this ​period, ​the ​IRS ​lacked adequate ​staff​, ​technology​, ​and resources ​for ​complex audits​​.

“For complex filings, it became increasingly difficult to determine the balance due,” Werfel explained. 

“To ensure fairness, we must make investments to determine what’s owed whether you’re a complicated filer who can afford an army of lawyers and accountants or a simpler filer.”

Private Jets, Partnerships in IRS Crosshairs

With new funding and enforcement capabilities, the IRS utilizes advanced analytics and AI to zero in on prime targets for tax evasion.

One ​new ​program ​focuses on ​owners of ​private jets, who may ​improperly deduct personal travel expenses. 

IRS ​is mining ​flight databases and plans dozens of corporate jet audits that could uncover individual tax cheating.

Another ​target is large partnerships, which some wealthy taxpayers use to shield income. 

IRS has launched over 75 audits of massive hedge funds, law firms, and real estate partnerships.

“They were shielding their income under the guise of a limited partnership,” said Werfel. 

Advanced analytics helps pinpoint not just likely evasion but also avoids unnecessary audits.

“AI allows us to be more precise in figuring out where the high risk [of evasion] is and where the low risk is, and that benefits everyone,” explained Werfel.

Billions in New Revenue Expected

The Treasury Department estimates this expanded IRS enforcement will generate $561 billion of extra tax revenue from 2024-2034. 

IRS maintains each extra dollar spent on enforcement brings in about $6 in revenue.

An IRS program targeting millionaires who owe over $250,000 has already collected over $480 million and counting. 

Republicans​ ​in Congress ​have criticized the more aggressive audits, claiming they will burden businesses without raising significant new revenue.

However, IRS Commissioner Werfel asserts these efforts will create a fairer system by ensuring that all high-income Americans pay the taxes owed. 

As the IRS utilizes its new resources and technology, taxpayers guilty of evasion should brace for heightened scrutiny.