Internal Revenue Service Commissioner Charles Rettig told the Senate Finance Committee on Tuesday that the actual tax gap – the difference between taxes owed and taxes collected – could possibly be exceeding $1 trillion per year, mostly due to lack of funding for enforcement efforts.
External research suggests that over the next decade the tax gap could amount to over $7.5 trillion due to the rise of cryptocurrencies, foreign-source income and other contributing factors. Rettig pointed out that the IRS needs more highly skilled investigators to pursue “modern crooks” after the institution lost nearly 17,000 employees over the last ten years.
President Joe Biden’s budget proposal calls for a 10% increase in funding for the IRS. Past estimates promise at least $5 – $7 in revenue for each invested dollar spent on enforcement. The issue gains attraction after the president proposed the largest in history $2.25 infrastructure bill, funding for which the lawmakers are debating on.