Unpaid Annual Taxes Rise to $458 Billion, I.R.S. Reports

http://www.nytimes.com/2016/04/29/business/unpaid-annual-taxes-rise-to-458-billion-irs-reports.html

Version 0 of 1.

WASHINGTON — Potentially giving congressional Republicans new ammunition in their crusade against the Internal Revenue Service, the agency on Thursday said that annual unpaid taxes had increased to nearly half a trillion dollars.

In its latest analysis of what is commonly called the tax gap, the I.R.S. said there were average unpaid annual taxes of $458 billion for 2008 to 2010, a slight increase from $450 billion in 2006, the last year for which an analysis was conducted.

The agency said the increase resulted largely from new, more precise estimates and represented “no significant change in the amount of the tax gap or the rate of compliance.”

Still, the I.R.S. has been under pressure from congressional Republicans who have simultaneously cut its budget and excoriated the agency for operational deficiencies. But while Republicans could criticize the lack of any reduction in the tax gap, they also could face questions about their own aggressive efforts to slash the agency’s budget and staff.

Senator Orrin G. Hatch, Republican of Utah and chairman of the Finance Committee, said the best solution to reducing the tax gap would be a sweeping overhaul of the tax code, but he also called on the I.R.S. to do a better job.

“This recent data further underscores the need for the I.R.S. to get smarter about guaranteeing tax compliance and restore trust and faith in the agency,” Mr. Hatch said in a statement.

In announcing its findings, the I.R.S. said that enforcement efforts had recovered about $52 billion of the unpaid taxes.

Democrats had their own criticism, saying that the agency’s efforts were not good enough, with some calling for tougher enforcement, particularly on corporations.

“It is absolutely unacceptable that the country has lost more than $400 billion over the past 10 years from corporations dodging their tax payments,” said Senator Ron Wyden of Oregon, the senior Democrat on the Finance Committee. “This is money that could be put to good use shoring up critical programs such as Medicare. It’s time the I.R.S. put an effective tracking and auditing system in place to locate this lost money.”

The tax gap results from returns that are not filed, underreporting and underpayment, and the I.R.S. said those categories accounted for $32 billion; $387 billion and $39 billion in potential revenue for the federal government.

“A high level of tax compliance remains critical to help ensure taxpayer faith and fairness in the tax system,” the agency said in a statement. “Those who don’t pay what they owe ultimately shift the tax burden to those who properly meet their tax obligations.”