United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office General Government Division author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 1995-06-06 monographic deposited born digital GA 1.13:T-GGD-95-176 https://www.govinfo.gov/app/details/GAOREPORTS-T-GGD-95-176 P0b002ee180389509 f:tgg95176 DGPO 2010-08-12 2011-03-24 GAOREPORTS-T-GGD-95-176 machine generated eng fdlp REPORT GAOREPORTS-T-GGD-95-176 T-GGD-95-176 Tax administration Income taxes Tax law Noncompliance Taxpayers Tax nonpayment Government collections Reporting requirements Tax returns Tax evasion IRS Taxpayer Compliance Measurement Program Testimony GGD One of the biggest challenges facing the Internal Revenue Service (IRS) is finding ways to reduce the income tax gap--the difference between income taxes owed and taxes voluntarily paid. This testimony makes several points. First, IRS estimates that taxpayers fail to voluntarily pay in excess of $100 billion annually in taxes due on income from legal sources. IRS information suggests that U.S. taxpayers voluntarily pay 83 percent of the income taxes they owe--87 percent after IRS audits and other efforts. Second, compliance varies among taxpayers. Wage earners report 97 percent of their wages, whereas self-employed persons who operate on a cash basis report just 11 percent of theirs. Third, IRS data show that compliance is highest where tax withholding exists, a little lower where there is information reporting to IRS, and much lower where there is neither. The complexity of tax rules may also influence the level of tax compliance. Finally, some of the tax gap may not be collectible at an acceptable cost. GAO believes that it is very important for IRS to invest agency resources in measuring noncompliance and use that information to balance the competing goals of (1) maximizing tax revenues, (2) promoting uniform compliance, and (3) minimizing taxpayer burden. https://www.govinfo.gov/content/pkg/GAOREPORTS-T-GGD-95-176/html/GAOREPORTS-T-GGD-95-176.htm GAO/T-GGD-95-176 https://www.govinfo.gov/app/details/GAOREPORTS-T-GGD-95-176 Testimony GAO/T-GGD-95-176; Taxpayer Compliance: Reducing the Income Tax Gap; Tax administration Income taxes Tax law Noncompliance Taxpayers Tax nonpayment Government collections Reporting requirements Tax returns Tax evasion IRS Taxpayer Compliance Measurement Program