Frequently Asked Questions
A: The Tax Gap is all the money that is legally due under the tax law but is not collected each year.
That is over $600 billion per year. No business would accept such an enormous loss, but each year the loss grows because the government fails to do enough to collect it.
The Tax Gap is a matter of many taxpayers not paying all of what they legally owe and the government allowing that huge loss to continue.
It is intrinsically unfair, since it’s a financial advantage that only non-compliant taxpayers receive.
We hear a lot about the budget deficit and the possibility of tax increases that will sooner or later be needed to pay for this deficit. Any tax increases will be paid by the people who are already paying.
Wouldn’t it make sense to collect more of the taxes that are already on the books, all from people who are not paying what they owe?
That’s only fair!!
That’s what Shrink the Tax Gap is all about. See www.shrinkthetaxgap.com for more information and sign up for our Blog from the website.
A: No business will pay more tax than they currently owe. Our plan does not increase any taxes.
All individuals with business income, all S-corporations and all Partnerships will prepare their returns and pay tax exactly as they do today. No additional reporting or schedules will be required for 75% of individuals with business income or businesses they own.
Individuals with business income, or who own S-corporations or Partnerships, and who have total income in the top 25% of taxpayers will receive a new 1099 Form from their bank that reports the annual total of deposits and withdrawals in their bank accounts. They and their preparers will use this information to prepare an accurate tax return, much as other taxpayers use 1099’s and W-2’s.
A schedule will be provided by the IRS for taxpayers and their preparers to reconcile this information with their tax return, which will reduce the need for the IRS to audit returns which might otherwise indicate possible discrepancies.
A: As we note in the September Tax Notes article, the IRS has also had several major notable large technology project success, especially in recent years with the Return Review Program (RRP), the Foreign Account Tax Compliance Act (FATCA) program and the IRS responsibilities under the Affordable Care Act. Many of the unsuccessful projects in the past were those that tried to replace legacy systems in complex step-by-step ways. Our proposal tries to minimize its dependence on integration with the IRS’s legacy systems. Of course, some integration is essential, but in the main we envision standing up new systems that will eventually just replace current systems.