The IRS Seems Surprised That the Tax Gap Isn’t a Lot Worse

Your efforts to keep the increase in the tax gap under $100 billion is greatly appreciated.

The Internal Revenue Service estimates that U.S. companies and individuals failed to pay $385 billion in taxes they owed in 2006, an increase from $290 billion five years earlier. The agency said the rate of compliance remained almost unchanged at 85.5 percent, down slightly from 86.3 percent in 2001. The IRS announcement today is the first update to the so- called tax gap estimate in five years. The gap grew because the income base expanded between 2001 and 2006, the agency said. “Despite what seems to be increasing complexity, Americans’ compliance remained steady,” Frank Keith, an IRS spokesman, said in a telephone interview today.

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