IRS Says Wealthy Americans Are Evading Over $150B In Taxes A Year: 'Plenty Of Work To Be Done'

IRS Commissioner Danny Werfel has disclosed that wealthy Americans are evading taxes amounting to over $150 billion annually, a situation that is contributing to a “lack of fairness” in the tax system. The IRS is now deploying significant resources to address this issue.

What Happened: In an exclusive interview with CNBC, Werfel revealed that the IRS is targeting wealthy individuals, partnerships, and large companies through various programs aimed at identifying tax evasion. He noted that the lack of funding for the IRS over the years had led to a significant decrease in audits, particularly for complex and sophisticated returns.

"There is plenty of work to be done,” he said.

Werfel emphasized the need for investments to ensure that the IRS can accurately determine the taxes owed, regardless of the taxpayer’s complexity. The agency has already seen some success in its efforts to collect unpaid taxes from millionaire taxpayers.

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Werfel also highlighted private jets and limited partnerships as potential areas of tax evasion. The IRS has initiated a program to audit private jet owners and is examining some of the largest and most complicated partnership returns to address these issues.

Why It Matters: The revelation of massive tax evasion by the wealthiest Americans comes amid global efforts to tackle tax avoidance and evasion. The EU Tax Observatory recommended a 2% tax on the wealth of the world’s billionaires in its 2024 Global Tax Evasion Report, as one of six steps to promote tax justice.

Earlier, a Senate Finance Committee investigation uncovered major violations of a 2014 plea agreement by Credit Suisse Group AG, which had enabled tax evasion by numerous wealthy U.S. individuals. The committee’s findings revealed an ongoing and potentially criminal conspiracy involving the non-disclosure of nearly $100 million in secret offshore accounts belonging to a single family of American taxpayers.

Moreover, prominent U.S. Senators Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.) had urged the Treasury Department to expedite the implementation of tax reporting requirements for crypto brokers to close the vast crypto tax gap and align the industry with other financial sectors in tax reporting.

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