Paul L. Caron
Dean


Friday, October 4, 2019

U.S. Tax Gap Holds Flat At 14%

Tax Gap

Wall Street Journal, U.S. Tax Compliance Holds Flat at 86%:

Americans pay about 86% of their federal taxes, leaving a $381 billion annual gap between taxes owed and taxes collected, according to an Internal Revenue Service study released Thursday.

The government’s first report on the “tax gap” since 2016 shows tax compliance holding steady as the IRS shrinks. However, the study covers tax years 2011 through 2013, and the IRS has reduced audits and staffing considerably since then.

In those years, taxpayers paid 83.6% of the taxes they owed voluntarily and a total of 85.8% after IRS enforcement efforts. Those are about equal to the previous study, which covered tax years 2008 through 2010 and was updated with the same methodology used for the new analysis.

“Voluntary compliance is the bedrock of our tax system, and it’s important it is holding steady,” Charles Rettig, the IRS commissioner, said in a statement.

https://taxprof.typepad.com/taxprof_blog/2019/10/us-tax-gap-holds-flat-at-14.html

IRS News, Tax, Tax News | Permalink

Comments

Consumers got millions in questionable electric-car tax credits

Thousands of auto buyers may have improperly claimed more than $70 million in tax credits for purchases of new plug-in electric vehicles using ineligible cars and trucks, a U.S. Treasury Department watchdog said Thursday.

https://www.accountingtoday.com/articles/consumers-got-millions-in-questionable-electric-car-tax-credits?position=editorial_3&campaignname=ACT_Daily_Daily_MobileTest_SplitB-10042019&utm_source=newsletter&utm_medium=email&utm_campaign=ACT_Daily_Daily_MobileTest_SplitB%2B%27-%27%2B10042019&bt_ee=JKpgZbFThNjMEjHg04mTwZ9vqk%2Ftiw5GUb8C%2F3ssw2STRS%2FsMPviArwry31DWC9i&bt_ts=1570182753945

And some of you want to implement a wealth tax? Are you kidding me? The IRS can't even handle the current income tax.

Posted by: Dale Spradling | Oct 4, 2019 6:49:55 AM

Dale: You cite $70 million in improperly claimed tax credits for electric vehicles as part of the tax gap.

Roughly 80% of the tax gap ($352 billion out of $441 billion) is due to unreported income by self-reporters. Most workers have their income and tax reported to the IRS by their employers. Not self-reporters though: they report their own numbers, and they under-report about two-thirds of their actual income.

Who are these self-reporters? Self-employed professionals (doctors, lawyers, accountants, etc.), farmers, small businesses. That's where the tax gap really comes from--not from improperly claimed tax credits on electric vehicles.

https://www.irs.gov/newsroom/understanding-the-latest-tax-gap-estimates-and-overall-taxpayer-compliance

Posted by: Gerald Scorse | Oct 7, 2019 6:32:56 AM