New Tax Gap (IR-2022-192)
The report found that the majority of the tax gap is due to underreporting of income, particularly from businesses and self-employed individuals. The IRS estimates that underreporting of business income accounts for about $125 billion of the tax gap, while underreporting of self-employed income accounts for about $74 billion.
The report also found that non-filing of tax returns and underpayment of taxes are significant contributors to the tax gap. The IRS estimates that non-filing of tax returns accounts for about $32 billion of the tax gap, while underpayment of taxes accounts for about $48 billion.
The IRS has implemented a number of measures to address the tax gap, including increased enforcement efforts, improved technology, and enhanced outreach and education. The agency is also working with other federal agencies, state tax authorities, and international partners to improve compliance and reduce the tax gap.
Overall, the tax gap report provides important information on the magnitude of the problem and the areas where the IRS can focus its efforts to improve compliance and reduce the tax gap.