Taxpayers Underpaid The IRS By $385 Billion In 2006, Agency Says

[Bill USA]

We could help the deficit situation a good deal just by collecting the taxes that are owed us.

Huffington Post

{all emphases are my own_Bill USA}

WASHINGTON — People and businesses underpaid their taxes by an estimated 17 percent in the most recent year studied, failing to send the government a massive $450 billion that it was owed, according to an Internal Revenue Service report released Friday.

The study covered 2006, the most recent data the IRS said was available. The amount of underpaid taxes far exceeded the size of the entire federal budget deficit at the time.

After IRS audits and other enforcement efforts, non-compliance in 2006 shrank to 14 percent. That left the final amount of unpaid taxes at $385 billion, the agency said.

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.... [font size="3"]the total of unpaid taxes in 2006 was larger than that fiscal year's budget deficit of $248 billion. [/font]
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To bridge the deficit, collect some taxes - Reuters

At a time when the U.S. government needs every dollar of revenue it can get, alarm bells should be sounding in Washington about a new IRS study showing that the Treasury is losing a fortune to tax evasion.

The study, released last Friday, found that the government missed out on $385 billion in uncollected taxes in 2006, the most recent year for which the IRS has complete data. If we extrapolate the IRS’s assumption that the U.S. government only collects about 85 percent of total tax liabilities, the revenue lost by the Treasury in the past decade exceeds $3 trillion.

That is serious money–nearly equal to all the new federal debt incurred during the Bush years. And without tougher action against tax cheats, the U.S. government stands to lose trillions more over the next decade.

Many of the biggest tax cheats are wealthy earners. While most working stiffs–the W-2 crowd–get their taxes automatically withheld from their paychecks, business owners and self-employed professionals have lots of ways to cheat. And cheat they do: Unpaid taxes by businesses and corporations accounted for nearly half of the total tax gap in 2006.
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[rfranklin]

1. Deficit solution...yet the Republicans have been stripping the IRS of resources for years...

Could it be they don't really care about the deficit? You betcha!

[progress2k12nbynd]

2. We ALL need to pay higher taxes and pay ALL of them...

That would eventually close the deficit.

I also think that would be an easier message to sell then that we want just 1% of people to make up the difference.

[Bill USA]

3. Rich Cheat More On Taxes, New Study Shows - Forbes.com

http://www.forbes.com/2008/10/21/taxes-irs-wealth-biz-beltway-cz_jn_1021beltway.html

A new study based on unpublished Internal Revenue Service data shows the rich are different when it comes to paying taxes: They hide more of their income.

The previously unreported study estimates that taxpayers whose true income was between $500,000 and $1 million a year understated their adjusted gross incomes by 21% overall in 2001, compared to an 8% underreporting rate for those earning $50,000 to $100,000 and even lower rates for those earning less. (The "net misreporting rate" as the IRS calls it, includes both underreported income and inflated deductions.)

In all, because of their higher noncompliance rates, those with true incomes of $200,000 or more received 25% of all income, but accounted for 40% of net underreported income and 42% of underreported tax in 2001, the new analysis finds.

Slide Show: Who Cheats The Most On Their Taxes?

The study was written by Joel Slemrod, an economics professor and director of the Office of Tax Policy Research at the University of Michigan's business school and IRS economist Andrew Johns. It has not been officially endorsed or even released by the IRS and seems sure to add fuel to the election season debate over whether those earning $250,000 or more should pay higher tax rates, as Sen. Barack Obama, the Democratic presidential nominee, has proposed.

CLICK ON PHOTO TO SEE SLIDE-SHOW WITH FACTS ABOUT TAX EVADERS


No. 1 (Cheats Most)
True Income: $500,000 to $1 million.......Net Misreporting Rate: 21%


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