Earlier this year, the IRS released tax gap estimates for the tax year 2006. The link shows a comparison of tax years 2001 and 2006. The compliance percentage is similar between the two years even though the raw "tax gap" has risen from $290 billion to $385 billion.
The IRS release breaks the 2006 tax gap into three categories of under-reporting, non-filing and underpayment. The tax gaps for those categories are $376 billion, $28 billion and $46 billion, respectively.
The release also sheds light on compliance relative to third-party reporting. Items such as wages which are reported on a W-2 only have a result of 1% misreporting. Income amounts that have no third party reporting requirements have a 56% misreporting rate for 2006.
As a result, look for the IRS to look for additional ways in which income items will be reported by third parties in an attempt to narrow the tax gap.
The IRS release breaks the 2006 tax gap into three categories of under-reporting, non-filing and underpayment. The tax gaps for those categories are $376 billion, $28 billion and $46 billion, respectively.
The release also sheds light on compliance relative to third-party reporting. Items such as wages which are reported on a W-2 only have a result of 1% misreporting. Income amounts that have no third party reporting requirements have a 56% misreporting rate for 2006.
As a result, look for the IRS to look for additional ways in which income items will be reported by third parties in an attempt to narrow the tax gap.
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