Tax & Accounting Blog

The Tax Gap – IRS Oversight Board’s Annual Report (June 2012)

1099, 6050W, Cost-Basis Reporting, International Reporting & Compliance, ONESOURCE, Tax Information Reporting, Trust Tax June 26, 2012

The IRS Oversight Board issued its annual report to Congress for 2011 in June (posted June 5, 2012). The report notes that the estimated net tax gap grew nearly $100 billion from 2001 (when the gap was last estimated) to 2006.

Of particular interest is the Board’s assessment of the tax gap and IRS’ efforts to reduce it, along with the administrative challenges posed by late-passed and complex tax legislation. For tax information reporting, the report singles out three recent enforcement program areas of promise in reducing the tax gap in future years:

  • Cost basis reporting
  • Merchant card payment reporting

The Board concludes in their report that IRS resources continue to be stretched thin (or dare we say, “taxed?”) and that the current trend of decreasing resources to go along with increasing complexity serves only to exacerbate the problem. Though a breaking point was not predicted, the Board report warned that a continuation of current trends increases the risk that IRS will experience serious problems in the future.

View the Oversight Board’s complete report.

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