![]() ![]() Through enforcement, the IRS collected an average of $60 billion of those unpaid taxes annually, reducing the gap between taxes owed and taxes paid in those years to $381 billion per year, on average. Most of the unpaid taxes were the result of taxpayers’ underreporting their income. In its most recent report on uncollected taxes, the IRS estimated that an average of $441 billion (16 percent) of the taxes owed annually between 20 was not paid in accordance with the law.In this report, the Congressional Budget Office examines how those activities declined over the 2010–2018 period as the service’s resources decreased and how changes to the IRS’s budget could affect federal revenues. The Internal Revenue Service (IRS) promotes compliance with tax laws in many ways: It verifies information provided by taxpayers, works to prevent the distribution of refunds that are claimed erroneously, audits tax returns, and attempts to collect unpaid taxes and unfiled returns, among other efforts. Unpaid Assessments and Collections Revenues Cases Using Automated Underreporter Software as a Share of Individual Returns Amount of Additional Tax Recommended After Audits Examination Rate for Corporate Returns, by Amount of Assets ![]() Examination Rate for Corporate Returns, by Type of Examination Examination Rate for Certain Returns With and Without the Earned Income Tax Credit Examination Rate for Individual Returns, by Amount of Income Examination Rate for Individual Returns, by Type of Examination Employees in Selected Enforcement Positions Funding and Number of Employees of the Internal Revenue Service, by Appropriation Account Overview of Enforcement Activities of the Internal Revenue Service Relationship Between Unpaid Individual Income Taxes and Third-Party Data Amount of Underreported Tax on Individual Income Tax Returns, by Type of Reporting Error Unpaid Taxes, by Method of Avoiding Payment Estimated Effect of Increasing Appropriations for the Internal Revenue Service by 0 Billion Estimated Effects of Two Options to Increase Appropriations for the Internal Revenue Service Appendix B: CBO’s Approach to Estimating Changes in Revenues.Appendix A: Detailed View of Tax Law Enforcement.How Enforcement Spending Is Reflected in Baseline Revenue Projections.Scorekeeping Guidelines for Formal Cost Estimates.Estimated Effect on Revenues of Two Options to Increase Funding.How Changes in Funding Would Affect Future Revenues.Impact of the Coronavirus Pandemic on Enforcement.Appeals of Recommended Additional Taxes and Penalties.Additional Taxes Recommended Following Examinations.Examinations of Corporate Income Tax Returns.Examinations of Individual Income Tax Returns.Comparison of Returns With Information From Third Parties.How the Internal Revenue Service Enforces Tax Laws.Factors That Affect the Size of the Tax Gap.The Gap Between the Amount of Taxes Owed and the Amount Paid.How Might an Increase in Funding for Enforcement Affect Federal Tax Receipts?.How Have Reductions in Funding and Staffing Affected Enforcement?. ![]()
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