he Internal Revenue overstated deductions. The agency
Service is reporting that also determined that most of the
the difference between what understated income was related to
U.S. taxpayers owe and actually business activities, not wages or
pay on time totals more than $300 investment income.
billion a year. Studying over
46,000 tax returns for While these figures may appear
individuals revealed the tax gap. shocking, they more or less match
These results indicate a failure the results found in a 1988
of 15 to 16 percent of individual study. The numbers are also
tax payers to fully pay their artificially inflated by
taxes. IRS enforcement activities individuals that fail to file
recovered roughly $55 billion of returns and pay taxes. The IRS is
that total gap, leaving a net tax not expected to take any new
gap of $257 billion to $298 course of action based on these
billion. results.
The tax gap is comprised of three
components -- underreported
income, underpayment of taxes and
failure to file tax returns at
all. 80 percent of gap was due to
individuals underreporting their
income, while non-filing and
About the Author:
Richard Chapo is CEO of http://www.businesstaxrecovery.com - Obtaining tax refunds for small businesses by finding overlooked tax deductions and credits through a free tax return review.
Source: www.isnare.com
