AT A TIME WHEN AMERICANS are deeply polarized on many issues, the need to crack down on tax scofflaws is one topic that probably won’t trigger a Thanksgiving dinner squabble. Lawmakers like the idea, too, because narrowing the tax gap—the difference between the total taxes owed and the amount that goes unpaid—could fund billions of dollars in government spending on infrastructure, child care and other initiatives. Estimates of the size of the tax gap vary, but IRS Commissioner Chuck Rettig made headlines earlier this year when he estimated that it exceeds $1 trillion annually. When it comes to specifics, though, some proposals to recover outstanding taxes could give even honest taxpayers pause, particularly if they have privacy concerns.
The Biden administration has proposed increasing the IRS budget by $80 billion over the next decade, which would fund, among other things, the cost of hiring 5,000 new enforcement agents. The administration has emphasized that the proposed increase in audits, which have plummeted in recent years (see the chart above), would focus on large corporations and individuals who earn more than $400,000 a year.
This story is from the August 2021 edition of Kiplinger's Personal Finance.
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This story is from the August 2021 edition of Kiplinger's Personal Finance.
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