For Immediate Release
Contact: Gigi Thompson Jarvis, CAE
202.822.0724
[email protected]
IRS Releases New Tax Gap Estimates
First New Estimates in 10 Years
W ASHINGTON, DC (April 28, 2016) The Internal Revenue Service (IRS) today released new estimates of
the “tax gap,” the amount of tax liability faced by taxpayers that is not paid on time. Estimating the gap
requires a “major statistical effort,” according to the IRS, so the gap is only estimated every few years.
The last full update reported showed that the compliance rate for tax year 2006 was basically unchanged
from the report on tax year 2001. And again, IRS reports that the tax gap is essentially unchanged since it
last reported this figure ten years ago.
“We need to keep in mind several facts when considering this data,” said Robert Kerr, Senior Director,
Government Relations for the National Association of Enrolled Agents (NAEA). “The first is that IRS takes
years to estimate the tax gap, so the newest data considered is from tax years 2008-10, before IRS’
budget took an approximately $1B hit (annually) and before staffing dropped by some 16,000 or so. Let’s
not conclude that a flat tax gap indicates tax compliance hasn’t taken a hit because of reduced IRS
resources. We won’t know that for years.”
“The second fact is that even though many Americans are completely compliant—they file timely,
accurate tax returns and pay taxes due—the net tax gap is enormous; a bit over $400B annually, which,
roughly speaking, is nearly large enough to fund all non-defense federal discretionary spending. The third
fact, and I believe Commissioner Koskinen has made this observation, is that it is practically speaking
impossible to eliminate the tax gap altogether. We wouldn’t want to live in a country that had 100 percent
compliance. The apparatus to get there would be far too oppressive.”
For more information, see the IRS’ Tax Gap Estimates for Tax Years 2008-2010.
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About the National Association of Enrolled Agents (NAEA)
NAEA is the one organization dedicated solely to representing the interests of enrolled agents (EAs),
America’s tax experts. EAs are the only federally-licensed tax practitioners who specialize in taxation and
also have unlimited rights to represent taxpayers before the IRS. Find out more about becoming an EA at
www.naea.org, or find an EA in your area in the searchable directory at www.eatax.org.