'These Steps Are Urgent': IRS Takes Action in Wake of Record-Breaking $688 Billion Tax GapThe IRS disclosed a historic tax gap for the 2021 tax year, marking the largest-ever recorded shortfall in tax payments.
Key Takeaways
- A shortfall happens when Americans fail to pay taxes owed on their returns.
- The IRS plans to overcome the shortfall through improved taxpayer services, new technology tools and additional compliance work.
The Internal Revenue Service (IRS)announcedThursday that Americans failed to payan estimated$688 billion intaxesowed on their 2021 returns, marking the most significant tax shortfall ever recorded,The Wall Street Journaladded. The tax gap has increased by more than $192 billion from previous estimates for 2014 to 2016 and $138 billion from estimates for 2017 to 2019.
Approximately $542 billion of the $688 billion total is attributed to underreported income, while the remaining portion of the tax gap is connected to individuals who failed to file their returns on time or as required ($77 billion) or filed on time but neglected to pay their tax bills in full or on time ($68 billion).
The gap doesn't include late payments and IRS enforcement efforts, which the agency says are expected to generate an additional $63 billion for the 2021 tax year, resulting in a projected net tax gap of $625 billion.
To address the significant deficit, the IRS intends to intensify its audit and enforcement efforts. It will also prepare for an influx of income reporting from gig workers due to new rules governing payment apps such asVenmoandPayPalin the tax year 2023, the agency said in thereleaseon Thursday.
“这增加的税收差距凸显了不rtance of increased IRS compliance efforts on key areas," IRS commissioner Danny Werfel said in a statement. "These steps are urgent in many ways, including adding more fairness to the tax system, protecting those who pay their taxes and working to combat the tax gap."
