House panel working on ways to address the IRS' tax gap

House panel working on ways to address the IRS' tax gap

Republicans are working on ways to address the IRS' tax gap after several powerful members of the party cast doubt on the estimates that have been floated.

The House Ways and Means Committee Chairman Kevin Brady has told FOX Business that the committee is working on legislation to address the tax gap by getting an accurate reading of how much the agency is collecting from taxpayers each year.

We are finalizing a bill to eliminate the tax gap by acquiring a true estimate by taking input from the Joint Committee on Taxation to verify those tax gap estimates and requiring the IRS to work with Congress on a strategy to address it, Brady said.

During a hearing earlier this year, IRS Commissioner Charles Rettig said the tax gap could exceed $1 trillion per year, extrapolating based on the growth of cryptocurrencies, foreign-source income and other items.

The most recent analysis shows that the gross tax gap for tax years 2011 to 2013 is estimated at $441 billion.

Brady noted that estimated estimates are based on projections and outdated data.

Right now those numbers are just guesses, many of them from databases that are six or seven years old, studies that tend to guess at issues like Bitcoin, hidden transactions and foreign income, Brady explained. There is therefore neither real estimate of it nor of other segments, which make up the tax gap. So let's find the problem and then work together to solve that.

Sen. Mike Crapo, R-Idaho, who is the ranking member of the Senate Finance Committee brought similar concerns about the estimate of tax gaps earlier this year, reported by FOX Business.

In a letter to Rettig in May, Crapo asked for clarification as to where the figure came from before Congress began making policy decisions based on it.

His office told FOX Business at the end of last month that it had still not gotten a satisfactory response regarding his request for more clarity on where the U.S. was losing out on collection of lawfully due taxes.

When asked where Brady would focus my reforms within the IRS, he told FOX Business that he wants to see the agency do better with the resources it has, including better auditing and information gathering to target and win cases against taxpayers.

He said he would like to see funds put towards customer service initiatives.

Additional funds need to go toward better customer service and getting their employees back in the office and responding quicker, Brady added.

Closing the revenue gap by increased IRS enforcement was one of the revenue-raising measures being considered by a group of bipartisan lawmakers seeking avenues to fund their infrastructure plan. The measure, however, lost broad support among Republicans.

Sen. Joe Manchin, D-W. Va., said last month that IRS reform would be done, even if it had to pass in a standalone bill.

The bipartisan infrastructure plan does include a crackdown on cryptocurrency transactions, expected to raise $28 billion over the course of a decade.