WASHINGTON – On Thursday, leaders at the Internal Revenue Service (IRS) announced the recovery of $4.7 billion in unpaid taxes and revenues associated with various criminal activities, following a significant influx of funding from the Democrats’ extensive tax, climate, and health legislation passed in 2022.
This news comes amidst escalating demands from Republicans, who will control both chambers of Congress in the upcoming session and have persistently called for the cancellation of the substantial funds allocated to the agency by the Democrats.
In light of this, IRS leaders aim to bolster their case for retaining the current funding levels within the agency.
During a press call outlining the new initiatives, IRS Commissioner Danny Werfel expressed optimism regarding the enhancements made to the agency since his appointment. He believes these improvements will facilitate the next administration and the newly empowered Republican Congress in extending the benefits of the 2017 Tax Cuts and Jobs Act.
Republicans are working toward the renewal of approximately $4 trillion in expiring tax cuts, a hallmark achievement of former President Trump’s initial term, which could play a pivotal role in his potential return to the presidency.
“We are aware of serious discussions surrounding a significant tax proposal from the next Congress,” Werfel stated, adding, “Given the enhancements we’ve implemented during my tenure, I am confident that the IRS will be in a strong position to implement any new tax legislation that Congress passes.”
The tax recovery figures revealed on Thursday included $1.3 billion collected from wealthy taxpayers who previously owed back taxes, alongside $2.9 billion linked to the IRS Criminal Investigation’s efforts targeting crimes such as drug trafficking and terrorist funding. Additionally, $475 million was recovered from civil and criminal cases initiated by information provided by whistleblowers.
Furthermore, the IRS reported recovering $292 million from more than 28,000 high-income individuals who have failed to file taxes since 2017, representing a $120 million uptick since September.
Despite these advances, the future of the agency’s budget remains uncertain.
The IRS was originally allocated $80 billion through the Inflation Reduction Act, but a debt ceiling and budget-cutting agreement between Republicans and the White House led to a rescinding of $1.4 billion for the agency, as well as a separate decision to redirect an additional $20 billion away from IRS funds to other nondefense expenditures over the next two years.
In November, U.S. Treasury officials urged Congress to release $20 billion intended for IRS enforcement, which has been effectively frozen due to legislative language.
This $20 billion is distinct from the $20 billion that was previously cut from the agency last year. Unfortunately, the legislation designed to maintain government operations inadvertently duplicated the earlier funding cut.
Treasury officials have cautioned that severe consequences could arise if this funding remains unreleased due to inaction.
Last week, Trump revealed intentions to nominate former Missouri Congressman Billy Long to lead the IRS. Long, who previously served six terms in the House and worked as an auctioneer, has faced criticism from some Democrats, including Senator Ron Wyden of Oregon, who labeled Long’s nomination as “a bizarre choice,” referencing Long’s involvement in the controversial Employee Retention Tax Credit industry.
Trump assured on his social media platform that “Taxpayers and the wonderful employees of the IRS will love having Billy at the helm.”
Commissioner Werfel’s term is slated to conclude in 2027, and he has yet to announce if he intends to resign prior to Trump’s potential inauguration, with Trump having the legal authority to terminate Werfel’s position.
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