The Tax Gap: The IRS Issues New Estimate of What It Failed to Collect

Just how much in taxes does the IRS not collect, or at least not on schedule? Every few years, the IRS tries to come up with an estimate of this number, aka the “tax gap.” Its latest efforts, released earlier this month, indicate that for 2006, the net tax gap came to about $385 billion, compared with total tax payments of $2.2 trillion.

That’s calculates to a compliance rate of 85.5%, or a hair under 2001’s rate of 86.3%. However, the IRS noted that some growth in the tax gap estimate could be attributed to better data and improved estimation methods. What’s more, it should be noted that the United States has one of the highest tax compliance rates in the world at 83.7%, according to a 2011 report by the Treasury Inspector General for Tax Administration. (more…)