Tax (Gap) Evasion

TaxAnalysts has just announced that it's suing the IRS to get suspiciously withheld documents on the tax gap. Last week, IRS commissioner Mark Everson said that IRS enforcement efforts had brought in more money, and that the IRS was paying more attention to high-income earners who avoid paying taxes. However, the IRS won't release the documents on which it's been basing these claims. So TaxAnalysts is suing them for the documents under the Freedom of Information Act. Kudos to TaxAnalysts for trying to get these important reports. Still, it wouldn't really matter much even if the IRS is telling the truth. Whatever progress IRS has made recently is only the beginning. The tax gap is in the $300 billion range; IRS enforcement efforts still only pick up around $40-odd billion of it. Plus, much of the money owed to the IRS is staying with publicly-traded corporations, which Everson has not said the IRS is focusing on. From today's BNA ($): As the Internal Revenue Service focuses on getting companies to reconcile the differences between the profits they report to shareholders and those they report for tax purposes, figures from 2004 showed a big discrepancy among publicly traded companies, an IRS spokesman confirmed Nov. 27. He confirmed that according to data done by IRS researchers, in 2004 publicly traded companies reported $554 billion in profits on their financial statements but told IRS that for tax purposes they earned only about $394 billion. The IRS and the new Congress will have plenty of work to do on the tax gap. Nothing short of sweeping reform should get them off the hook.
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