The IRS has released new estimates showing that the annual
“tax gap” has grown from $385 billion to $406
billion.
The tax gap represents the IRS’s best estimate of the
difference between what taxpayers actually owe in taxes versus what
the IRS actually collects. The IRS bases its estimates on the
results of exhaustive audits of randomly selected taxpayers, as
part of its research program. The IRS also uses the program to
adjust its audit selection program, which is conducted through
computer scoring, information return matching, issue-specific
examinations and other methods.
The most recent estimates come from audits performed for tax
years 2008, 2009 and 2010. They show an annual net tax gap of $406
billion after $52 billion in enforcement revenue for a net
compliance rate of 83.7%. This is down from the last estimate in
2012, based on 2006 numbers. IRS enforcement actions in 2006 were
estimated to bring in $65 billion, resulting in a $385 billion net
tax gap and
