The United States loses approximately $ 1 trillion in unpaid taxes every year, Internal Revenue Service commissioner Charles Rettig estimated Tuesday that the agency lacks the resources to catch tax fraud.
The so-called tax gap has increased over the past decade. The last official estimate by the IRS was that from 2011 to 2013, an average of $ 441 billion a year was under-paid. Most of the unpaid taxes are the result of evasion by the rich and big corporations, Rettig said.
“We are disappointed,” said Rettig during a hearing of the Senate Finance Committee on the upcoming tax season.
Oregon Senator Ron Wyden, the Democratic chairman of the committee, called the $ 1 trillion tax gap a “mind-boggling number.”
“The fact of the matter is that nurses and firefighters have to pay with every paycheck and so many high-flyers can get out,” said Wyden.
Mr. Rettig attributed the growing tax gap to the $ 2 trillion surge in the cryptocurrency sector, which remains lightly regulated and a tax avoidance option. He also pointed to foreign income and corporate abuse of pass-through provisions in the tax code.
The size of the IRS’s enforcement division has declined sharply in recent years, Rettig said, and its ranks have decreased by 17,000 in the past decade.
The spending proposal published by the Biden government last week called for a 10.4 percent increase from the current level of funding for the tax office to $ 13.2 billion. The extra money would be used to better monitor the tax returns of high-income individuals and companies and improve customer service with the IRS