From: lessgovt@gmail.com   
      
   Americans Failed to Pay a Record $688 Billion in Taxes. The IRS Says That Will   
   Change.   
   By Ashlea Ebeling, Oct. 12, 2023, WSJ   
   Americans didn’t pay an estimated $688 billion in taxes due on their 2021   
   returns—the largest shortfall ever. Audits and other enforcement will be   
   stepped up to reduce the gap, the Internal Revenue Service said Thursday.   
      
   The number includes $542 billion due to underreported income, with the   
   remainder of the shortfall owed by those who didn’t file returns when they   
   should have or never paid their bills.    
      
   The total gap is up more than $138 billion from estimates for tax years 2017   
   to 2019. Much of the increase is due to economic growth. The IRS said there   
   has also been a shift from wage income, for which taxes are withheld, to gig   
   economy jobs, for which    
   there is a lower degree of compliance.   
      
   Taxpayers’ overall compliance rate is projected to stay relatively steady at   
   86.3% for tax year 2021, after audits and other enforcement actions.   
      
   The largest element of noncompliance, $182 billion, was attributable to   
   undeclared business and farm income reported on Schedule C and F on individual   
   returns.    
      
   “This increase in the tax gap underscores the importance of increased IRS   
   compliance efforts on key areas,” said IRS Commissioner Danny Werfel in a   
   statement.    
      
   The report comes as the IRS is ramping up audits on high-income taxpayers and   
   fighting to keep funding it got in the Inflation Reduction Act to improve   
   taxpayer service and increase enforcement. A recent bipartisan deal ratcheted   
   back that funding.   
      
   “The additional staff and hiring at senior levels is really a critical   
   aspect of being able to expand our coverage,” said Melanie Krause, IRS chief   
   data and analytics officer.   
      
   The agency is also preparing for an onslaught of additional reporting from gig   
   workers and entrepreneurs as new rules for reporting income through payment   
   apps take effect for tax year 2023. Taxpayers are more likely to comply with   
   rules when there is    
   third-party information reporting earnings and withholding. “If people know   
   the IRS has that information, they’re not going to underreport,” said   
   Natasha Sarin, a Yale law professor and former Treasury official.   
      
   After factoring in expected IRS compliance efforts and late payments bringing   
   in $63 billion, the estimated net tax gap for 2021 is $625 billion.   
      
   The report will play into debates around the growing federal deficit and how   
   to raise revenue in light of the expiration of the Trump tax cuts after 2025.   
   “If we do a better job of collecting revenue, we can make a down payment on   
   fiscal sustainability    
   and our spending priorities,” said Sarin.    
      
   The IRS notes that its estimates don’t fully include all the ways Americans   
   evade taxes such as using cryptocurrency, parking money in secret offshore   
   accounts and using flow-through entities.    
      
   “When it comes to noncompliance, there’s a lot that’s difficult to   
   measure,” said Sarin.   
      
   https://www.wsj.com/personal-finance/taxes/americans-failed-to-p   
   y-a-record-688-billion-in-taxes-the-irs-says-that-will-change-631ce518   
      
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