Update Tax Gap - Internal Revenue Service officials announced today that they have updated their estimates of the Tax Year 2007 tax gap based on the National Research Program (NRP).
The gap is the difference between the amount of tax that taxpayers owe the U.S. government and the amount that the IRS collects. Congress has been pressuring the IRS to quickly close this gap, which is partly caused by underreporting of income, underpayment of taxes and not filing returns.
IRS Tax Gap Estimates
The updated estimate of the overall gross tax gap for Tax Year 2007 – the difference between what taxpayers should have paid and what they actually paid on a timely basis – comes to $345 billion. This figure falls at the high end of the range of $312 billion to $353 billion per year, an estimate released last March.
“The vast majority of Americans pay their taxes accurately and are shortchanged by those who don’t pay their fair share,” said IRS Commissioner Mark W. Everson. “The magnitude of the tax gap highlights the critical role of enforcement in keeping our system of tax administration healthy.” See below.