Bloomberg News columnist John M. Berry makes some interesting points regarding President Obama’s new task force created to close the tax gap by focusing on closing loopholes, streamlining tax code and generating revenue.
“It may not accomplish much,” he says.
Highlights from the article include:
With April 15 fast approaching, stronger enforcement and a lot more resources for the Internal Revenue Service should head the administration’s to-do list.
The tax code could be undoubtedly improved, but the biggest problem is in terms of the tax gap, is a lack of adequate enforcement (making it harder for taxpayers to cheat and easier to catch those who do) and the Obama-ordered code review won’t much help that.
Recommendations for bolstering IRS complaince are due in early December, and eight months isn’t nearly enough time to lay the groundwork for big changes.
SMALL TIME TAX CHEATS
Research shows that the tax gap is the result of “low rollers” (proprietors of small businesses and farmers) who underreport income and the fail to pay employment taxes related to that income – not just high-rollers hiding income in offshore accounts.
NEED FOR GREATER ENFORCEMENT
A study of tax returns for 2001 found a gross tax gap of $345 billion, or 16 percent of taxes due. Enforcement activity plus other late payments recovered $55 billion of that, leaving a gap of $290 billion.
The dire state of the economy may also encourage more taxpayers to cheat. You can be sure the gap resulting from the 2008 tax returns is going to be noticeably bigger than it was in 2001.
**If you are can’t afford to pay your taxes this year, find out what you can do to avoid IRS penalties and other costly financial consequences.
More Tax Help, IRS News and Tax Relief Tips:
- Obama Proposes Doubling Tax Law Enforcement Budget and Seeks $400 Million Funding Boost for IRS Enforcement Activities
- Obama Budget Proposal Starts to Address the Tax Gap and Bolster IRS Compliance
- IRS Asserts Position on Tax Protesters: Sanctions Imposed for Advancing and Maintaining a Frivolous Argument
- In Bad Economy, Tax Enforcement and Convictions of Tax Defiers Are on the Rise
- No Income Tax Rate Increase Until 2011 But Expect Increased IRS Audits of Tax Returns in Near Future
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