IRS Sounds the Alarm: Record-Breaking $688 Billion Tax Gap

<p>In a stunning, and worrying, revelation, the Internal Revenue Service
(IRS) has dropped a fiscal bombshell, exposing an astonishing $688 billion tax
gap for the 2021 tax year. </p><p>That's a hefty chunk of change that <a href="https://www.irs.gov/newsroom/irs-updates-tax-gap-projections-for-2020-2021-projected-annual-gap-rises-to-688-billion" target="_blank" rel="nofollow">the IRS can’t account for</a>, marking
the largest tax shortfall on record. But wait, it gets even more outrageous. The
tax gap has swelled by a whopping $192 billion compared to estimates for 2014
to 2016 and a staggering $138 billion when stacked against estimates for 2017
to 2019. Ouch!</p><p> Unreported and Late Taxes</p><p>Where's all the money hiding, you ask? Well, approximately $542 billion
of that $688 billion total is due to sly, underreported income. The rest? Well,
it's a cocktail of evasion tactics: people who neglected to file their returns
on time or as required ($77 billion) and others who did file but conveniently
"forgot" to pay their tax bills in full or on time ($68 billion).</p><blockquote><p lang="en" dir="ltr">The IRS is taking "urgent" steps to address a record shortfall of $688 billion in taxes owed from 2021. <a href="https://t.co/xTWK87hr83">https://t.co/xTWK87hr83</a></p>— Denver7 News (@DenverChannel) <a href="https://twitter.com/DenverChannel/status/1713069371902370099?ref_src=twsrc%5Etfw">October 14, 2023</a></blockquote><p>But hold on. We're not factoring in the late <a href="https://www.financemagnates.com/terms/p/payments/">payments</a> and the <a href="https://www.financemagnates.com/search-results/?searchPhrase=irs" target="_blank" rel="follow">IRS</a>'s
vigilant enforcement actions, which are anticipated to churn out an extra $63
billion for the 2021 tax year. This gives us a net tax gap of $625
billion, just in case your calculator melted.</p><p> Going After Gig Workers</p><p>To tackle this alarming deficit, the IRS is taking drastic measures.
Brace yourselves; they're cranking up the audit and enforcement machinery,
going full throttle. Additionally, they're gearing up to wrangle in the
earnings of gig economy workers, courtesy of those newfangled payment apps like
<a href="https://www.financemagnates.com/search-results/?searchPhrase=Venmo" target="_blank" rel="follow">Venmo</a> and <a href="https://www.financemagnates.com/tag/paypal/" target="_blank" rel="follow">PayPal</a>. It's all part of the grand plan for the 2023 tax year, they
announced.</p><p>In the words of IRS Commissioner Danny Werfel, "This surge in the
tax gap serves as a blaring wake-up call for us to bolster IRS <a href="https://www.financemagnates.com/terms/c/compliance/">compliance</a>
efforts in crucial areas. Urgent steps are essential – not just for leveling
the playing field in the tax system but also for shielding the dutiful
taxpayers and confronting this gigantic tax gap head-on."</p><p>But, OK, the gig economy is the place to start … rather than
multinational corporations…</p>

This article was written by Louis Parks at www.financemagnates.com.