Shrink the Tax Gap - Significantly reducing the over $574B in annual taxes owed, but not paid

Our Purpose

Make the Federal tax system fair for everyone who pays their taxes

- - Most people pay their taxes
  - Some people don’t
  - That’s not fair

The Problem

$574 Billion PER YEAR in unpaid taxes

- - A minority of taxpayers fail to pay what they legally owe. This unpaid amount – the Tax Gap – is more than all the income tax paid by 90% of individual taxpayers.
  - Most of the Tax Gap is from high income taxpayers not paying what they owe.
  - This is unfair to every compliant taxpayer.
  - Before we raise taxes on those already paying what they owe, we should collect from those who are not paying.

The Solution

A practical plan to shrink the Tax Gap

Our plan raises $1.4 trillion over 10 years without raising taxes on any compliant taxpayer.

This is almost as much as President-Elect Biden’s tax plan would raise from increasing individual income and social security taxes.

Our plan includes three practical steps:
- - - - Use Modern technology to improve service and identify unreported income
        
        Ensure all income is reported to the IRS
        
        Provide IRS resources to collect what we know is owed.

It’s only fair – before raising taxes, we should collect the taxes already on the books.

Look Who Agrees

Leaders from across the political spectrum and business community support this plan.

See all the comments on our proposal

"...we have learned that coupling these resources with targeted increased information reporting to assist the agency in identifying potential tax avoidance will improve compliance and deter abuse. Charles Rossotti has laid out some thoughtful and constructive proposals to advance the ball in this area."

"This well thought out plan provides the new Administration with a practical and comprehensive framework to shore up our tax system. Addressing the tax gap will improve both the fairness and efficiency of our tax system."

"This is a no-brainer! Why would we debate tax reform without first collecting the full amount of taxes that are due?"

"Charles Rossotti ... has laid out a simple, compelling and fair plan to help fund critical needs that won’t pay for themselves."

"Charles Rossotti has developed a smart plan for generating a lot more federal income without raising the tax rate of anyone — just by giving the IRS the tools it needs to do a better job at enforcing the existing laws."

"Improving information reporting and better funding the IRS will most certainly help improve tax compliance. This is also one of the very few spending measures that truly will pay for itself. Tax cuts don’t pay for themselves; infrastructure spending doesn’t pay for itself, but measures to close the tax gap actually will."

In order to help recover some of the taxes not paid by partnerships and sole proprietor businesses, the Shrink the Tax Gap program recommends a new summary 1099 report of total annual deposits and withdrawals on certain financial accounts. This report ... would not pose a major technical challenge or burden for the providers.

Recent News and Events

See all News and Events

Rossotti Letter to the Editor

Tax Notes - 5/31/21

Read Letter

Why the GOP Made a Mistake Killing Off Biden’s IRS Plan

Politico Opinion by Charles O. Rossotti, Fred Forman and Fred Goldberg - 7/20/21

Read Article

Biden Financial Reporting Requirement an Integral Part of Plan to Address Tax Gap

Center on Budget and Policy Priorities: Off the Charts - 7/12/21

Read Article

The Current State of Taxpayer Service (or Lack Thereof) at the IRS

Procedurally Taxing Blog by Nina Olson - 7/14/21

Read Blog

Briefing: Former IRS Commissioners on Shrinking the Tax Gap

Business Forward Podcast with Charles Rossotti and Fred Goldberg - 7/14/21

Listen to Podcast (33 minutes)

The United States Forgoes Hundreds of Billions of Dollars Each Year Due to Unpaid Taxes

Peter G. Peterson Foundation - 4/6/21

Read Post

We Ran the Treasury Department. This Is How to Fix Tax Evasion.

By Timothy F. Geithner, Jacob J. Lew, Henry M. Paulson Jr., Robert E. Rubin and Lawrence H. Summers - New York Times Opinion Guest Essay - June 9,2021

Read Article

Here is our proposal to shrink the Tax Gap and make it easier for tax payers to deal with the IRS.

Reform Proposal Presentation

Join Our Email List For Shrink the Tax Gap Updates

Subscribe to our Blog

Our Purpose

Make the Federal tax system fair for everyone who pays their taxes

Most people pay their taxes

Some people don’t

That’s not fair

The Problem

$574 Billion PER YEAR in unpaid taxes

A minority of taxpayers fail to pay what they legally owe. This unpaid amount – the Tax Gap – is more than all the income tax paid by 90% of individual taxpayers.

Most of the Tax Gap is from high income taxpayers not paying what they owe.

This is unfair to every compliant taxpayer.

Before we raise taxes on those already paying what they owe, we should collect from those who are not paying.

The Solution

A practical plan to shrink the Tax Gap

Our plan raises $1.4 trillion over 10 years without raising taxes on any compliant taxpayer.

This is almost as much as President-Elect Biden’s tax plan would raise from increasing individual income and social security taxes.

Our plan includes three practical steps:

Use Modern technology to improve service and identify unreported income

Ensure all income is reported to the IRS

Provide IRS resources to collect what we know is owed.

It’s only fair – before raising taxes, we should collect the taxes already on the books.

Recent News and Events

Here is our proposal to shrink the Tax Gap and make it easier for tax payers to deal with the IRS.

Join Our Email List For Shrink the Tax Gap Updates

Business Forward Podcast with Charles Rossotti and Fred Goldberg