Highlights of the Joint Forum on Tax Compliance: Options for Improvement and Their Budgetary Potential

The tax gap--the difference between the tax amounts taxpayers pay voluntarily and on time and what they should pay under the law--has been a long-standing problem in spite of many efforts to reduce it. When some taxpayers fail to comply, the burden of funding the nation's commitments falls more heavily on compliant taxpayers. reducing the tax gap would help improve the nation's fiscal stability. For example, each 1 percent reduction in the net tax gap would likely yield $3 billion annually. Most recently, the Internal Revenue Service (IRS) estimated it would recover $55 billion of this gap, resulting in a net 2001 tax gap of $290 billion. The Congressional Budget Office (CBO), GAO, and the Joint Committee on Taxation (JCT) convened this forum on September 6, 2007, to discuss tax compliance and the options to close the tax gap. Participants were a select group of individuals drawn from the federal tax policy community and state revenue offices. This forum was designed for the participants to discuss these issues openly and without individual attribution in order to facilitate a rich and substantive discussion. Therefore, comments expressed do not necessarily represent the views of any one participant or the organizations that these participants represent, including CBO, GAO and JCT.