Oct 27, 2023
The Internal Revenue Service’s “historic” crackdown on rich tax cheats is bearing fruit.
In the past month, the federal tax agency has recovered $122 million from 100 cases of brazen tax evasion by some of the nation’s most wealthy — and seemingly greedy — individuals.
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The IRS has shared some shocking examples of the tax evasion cases closed — including one man, who was sentenced to 54 months in federal prison for creating a sham business to obtain $5 million in COVID relief loans, which he then used to buy Ferrari, Bentley and Lamborghini cars.
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Brazen tax evasion
One of the more shocking cases closed by the IRS in September involved a former CEO, who was sentenced to a year in prison and ordered to pay more than $15 million in restitution after he falsified millions of dollars of personal expenses as deductible business expenses.
The rich tax cheat used his unlawful proceeds to build a 51,000-square-foot mansion, featuring an outdoor pool and pool house; and tennis, basketball and bocce courts. His greed didn’t stop there. The IRS found he had falsified millions of dollars of expenses for luxury vehicles, artwork, country club memberships and homes for his children.
Another case targeted a restaurant owner who filed false tax returns and skimmed more than $670,000 from his business. He then spent $502,000 of his illegally obtained funds on gambling.
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Historic crackdown on tax cheats
These high-end collection cases are part of the IRS’s targeted sweep of 1,600 millionaires who owe hundreds of millions of dollars in taxes — in an effort to “restore fairness in tax compliance.”
Using federal funding granted through the Inflation Reduction Act, the IRS is targeting high-income earners who owe at least $250,000 each in back taxes, large business partnerships with assets of roughly $10 billion on average — including hedge funds, real estate investment partnerships, large law firms and other industries — and promoters abusing the nation’s tax laws.
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“Prior to the Inflation Reduction Act, more than a decade of budget cuts prevented the IRS from keeping pace with the increasingly complicated methods the wealthiest tax taxpayers used to hide their income and evade their paying their fair share of taxes,” IRS Commissioner Daniel Werfel told reporters, as reported by Business Insider.
“Inflation Reduction Act funding gives us the ability to take swift and aggressive action to improve compliance and close the tax gap.”
More: Best tax software to file with
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Bethan Moorcraft is a reporter for Moneywise with experience in news editing and business reporting across international markets.
