The “tax gap” is the difference between what the IRS estimates as the U.S. tax liability and the amount of tax that’s actually paid on time. Recently, the IRS announced its tax gap estimate for tax year (TY) 2022 is $606 billion, less than the TY 2021 estimated gap of $617 billion. A majority of the TY 2022 tax gap ($447 billion) is attributed to individual taxpayers. Corporate income, employment, estate and excise taxes make up smaller pieces of the total. The TY 2022 voluntary compliance rate rose slightly from 84.9% in TY 2021 to 85.0%. IRS Commissioner Daniel Werfel stressed the need for “adequate funding” to enable the agency to significantly boost tax compliance and reduce the tax gap.
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