Lawmakers Pressure the IRS to Strengthen Collection Efforts to Close the Yearly $345 Billion Tax Gap

As part of recent efforts to collect unpaid taxes, the Senate Finance Committee has held a confirmation hearing on July 14 to consider the nomination of William Wilkins to be IRS Chief Counsel. Wilkins is expected to spearhead IRS efforts to close the $345 billion a year tax gap.

In this recession, the government feels more hard-pressed than ever to collect unpaid tax revenue in order to fund economically beneficial projects that will ultimately contribute to long-term economic stability.

CCH (http://tax.cchgroup.com) reports:

IRS Chief Counsel Nominee Tells Senate Finance Committee of Plans to Reduce the “Tax Gap”

The Senate Finance Committee (SFC) held a confirmation hearing on July 14 to consider the nomination of William Wilkins to be IRS Chief Counsel. “In this role … you will lead, with the help of more than 1,400 attorneys in that office. And, you will lead the IRS on critical issues. You will have influence over the resolution of tax issues that affect individuals, businesses, and tax-exempt organizations,” Committee Chairman Max Baucus, D-Mont., emphasized to Wilkins in opening remarks.

CCH Comment: The hearing also included consideration of the nomination of Dan Tangherlini to be Assistant Secretary of Treasury for Financial Management and Chief Financial Officer.

Former SFC Staffer

Wilkins is currently a partner with Wilmer Cutler Pickering Hale and Dorr (WilmerHale), Washington, D.C., where he has been a member of the firm since 1988. Prior to joining WilmerHale, Wilkins had been a member of the SFC staff since 1981, culminating in his serving as staff director and chief counsel from 1987 to 1988. Currently, Wilkins also serves as the chairman of the American Bar Association’s Section of Taxation.

Tax Gap

During the hearing, Baucus voiced his concerns about the tax gap –the difference between what taxpayers owe and what they pay –and asked Wilkins how he would address the tax gap. “Taxpayers have a right to expect the IRS to act tenaciously to shut down scams and schemes that undermine the health of our voluntary tax system. A $345-billion annual tax gap is simply not acceptable,” said Baucus. He also underscored the importance of narrowing the tax gap to pay for health care reform.

CCH Comment: Baucus has emphasized the role that the IRS Chief Counsel must play in dealing with the tax gap before. At the nomination hearing of former IRS Chief Counsel Donald Korb on March 8, 2004, Baucus pointedly asked Korb what he would do to lower the tax gap and restore faith in the tax system. Korb served as IRS Chief Counsel from April 14, 2004, until December 19, 2008.

Wilkins responded to Baucus’ questions on the tax gap in two parts. First, he stated that he “shared his concerns” about the tax gap and raising revenue for health care reform. Next, rather than focus on enforcement efforts, Wilkins directed his tax-gap response toward “taxpayer education.” According to Wilkins, a part of the tax gap “deals with educating those who want to comply” and making it more easy and efficient for them to do so. He underscored that “multiple tax programs addressing the same policy area offer a chance for simplification,” which can help educate taxpayers and contribute to closing the tax gap.

Baucus is expecting the next chief counsel to help close the tax gap and made this mission clear at the hearing. “It [the tax gap] is just wrong, and I look to you to help address it,” Baucus told Wilkins.

The committee is expected to approve the nominees for a full Senate vote soon.

IRS Chief Counsel

The IRS Chief Counsel’s office consists of approximately 2,300 employees, including about 1,600 attorneys. The office provides legal advice to the IRS Commissioner and IRS operating divisions.

By H. Goehausen, CCH News Staff

The IRS is working very hard to collect unpaid taxes in order to meet new collection goals. Judith Burns from Dow Jones Newswires reports that “The IRS estimates current taxes paid account for 83.7% of taxes owed, a level Baucus wants to see increase to 90% by 2017.”

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8 Responses to “Lawmakers Pressure the IRS to Strengthen Collection Efforts to Close the Yearly $345 Billion Tax Gap”

  1. Jeff Day Says:

    The same lawmakers, that would tell the IRS to “close the tax gap” are the same politicians that would never want the tax gap “closed”!

    I personally believe the largest tax gap in the USA concerns the employment of ILLEGAL IMMIGRANTS. Both much of the tax gap and the illegal immigration issue can be closed @ the same time with one simple action:

    Advising all companies and/or individuals that hire illegal immigrants, you will follow the law and there can be no deduction of any kind for any payment that is unlawful and by definition a payment to an illegal is unlawful. Therefore produce farmers in California you get to pay income taxes yourselves on all income derived with no deduction for any payments to the illegals. Therefore chicken producers in the South and Oklahoma you get to pay income taxes yourselves on all income derived with no deduction for any payments to the illegals. Small produce farmers in Southern Indiana you get to pay income taxes yourselves on all income derived with no deduction for any payments to the illegals.

    We tell all income tax preparation firms, that the illegals first broke the USA laws by the illegal entry, we worry about that law first and the preparation of any income tax returns prepared with deductions for illegal immigrants are fraud.

    We tell all income tax preparation firms, that the illegals first broke the USA laws by the illegal entry, we worry about that law first and you have an obligation to the USA to report anyone that you know is here illegally.

    Jeff Day EA
    Evansville, IN

    If the companies can not take any deductions on their tax returns for the unlawful payments, perhaps they would go back to paying Americans!

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