I.R.S. Estimates Annual “Tax Gap” Exceeds $300B

Just how widespread is tax evasion? Well, according to an IRS study of ’s individual (non-corporate) federal income tax returns, more than 15% of what people owe they don’t pay and the IRS fails to recover through audits and other enforcement mechanisms.

The difference between what U.S. taxpayers owe the U.S. government and what they actually pay on time totals more than $300 billion a year, the Internal Revenue Service said on .

A research project at the federal tax agency found that the U.S. tax gap ranged from $312 billion to $353 billion in , compared with an earlier estimate of $311 billion. The project assessed individual, not corporate, taxes.

IRS enforcement activities helped recover about $55 billion of that total gap, leaving a net tax gap of $257 billion to $298 billion… That yields a noncompliance rate of 15 percent to 16.6 percent…

The biggest culprit was underreporting of income, which accounted for more than 80 percent of the total tax gap. Non-filing and underpayment each accounted for about 10 percent of the gap, the IRS said.

A facts & figures report (PDF) from the IRS breaks down the numbers even further, and also has a lot of data about how enforcement has changed over .