United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 2007-03-15 monographic deposited born digital 31 p. GA 1.13:GAO-07-423R https://www.govinfo.gov/app/details/GAOREPORTS-GAO-07-423R P0b002ee1803940ff f:d07423r DGPO 2010-08-12 2011-03-28 GAOREPORTS-GAO-07-423R machine generated eng fdlp REPORT GAOREPORTS-GAO-07-423R GAO-07-423R Income taxes Personal income taxes Research programs Tax credit Tax evasion Tax law Tax returns Taxpayers Voluntary compliance Tax gap Earned Income Credit IRS National Research Program Correspondence A66985 The Internal Revenue Service (IRS) most recently estimated that the gross tax gap--the difference between what taxpayers pay in taxes voluntarily and on time and what they should pay under the law--reached $345 billion for tax year 2001. The tax gap arises when taxpayers fail to comply with their individual income, corporate income, employment, estate, or excise tax obligations through (1) underreporting of tax liabilities on tax returns; (2) underpayment of taxes due from filed returns; or (3) nonfiling, which refers to the failure to file a required tax return altogether or on time. IRS's tax gap estimates are based on a variety of data sources. Recently, IRS studied individual taxpayer compliance through the National Research Program (NRP), and used the resulting compliance data to estimate the tax gap for individual income tax underreporting and the portion of employment tax underreporting attributed to self-employment taxes for tax year 2001. NRP, which involved reviewing around 46,000 individual tax returns, has yielded very important new information on taxpayer compliance for the first time since IRS's previous compliance measurement study was undertaken for tax year 1988. Compliance measurement studies such as NRP have the potential to identify ways to improve taxpayer compliance, which could in turn reduce the tax gap and improve the nation's fiscal stability. For example, each 1 percent reduction in the net tax gap would likely yield around $3 billion annually. Given its potential to improve individual taxpayer compliance, you asked us to review the results of the 2001 NRP study. In response, we agreed to identify (1) specific areas of individual taxpayer noncompliance that are promising targets for additional research to improve reporting compliance, and (2) opportunities, if any, found through the course of our work to improve future NRP studies. https://www.govinfo.gov/content/pkg/GAOREPORTS-GAO-07-423R/html/GAOREPORTS-GAO-07-423R.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-GAO-07-423R/pdf/GAOREPORTS-GAO-07-423R.pdf GAO-07-423R https://www.govinfo.gov/app/details/GAOREPORTS-GAO-07-423R Correspondence GAO-07-423R; Using Data from the Internal Revenue Service's National Research Program to Identify Potential Opportunities to Reduce the Tax Gap; Income taxes Personal income taxes Research programs Tax credit Tax evasion Tax law Tax returns Taxpayers Voluntary compliance Tax gap Earned Income Credit IRS National Research Program