TaxWatch: IRS has been missing out on $500 billion in taxes owed annually — and the gap between what’s owed and paid is projected to widen

by | Oct 28, 2022 | Stock Market

There’s a difference between the amount of taxes that people and businesses owe the Internal Revenue Service and the amount they actually pay. From 2014 to 2016, that multibillion-dollar gap widened, and the divide will likely get even wider later in the decade, the IRS said Friday.

For each of those years, taxpayers failed to pay an estimated $496 billion in owed taxes, the agency said Friday. That shortfall was fueled by three things: nonfiling; underpayment of what’s due; and, the most significant of the three, underreporting. After compliance efforts — including audits — and late payments, the estimated yearly gap in those years narrowed to $428 billion, researchers said. But the agency is set to have a lot more money to spend, including on enforcement, largely targeting tax receipts from corporations and wealthy households. Over the next decade, IRS will have an additional $80 billion for enforcement, customer service and operation upgrades as a result of provisions in the Democrat-backed Inflation Reduction Act. From 2011 to 2013, the agency noted Friday, the estimated yearly gap was $438 billion. When the IRS pressed taxpayers to pay their full tab, the gap narrowed to $380 billion. IRS resea …

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