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Archive for the ‘TaxGap’ Category

Exposing the Tax Gap

Posted by taxguru on July 23, 2021

One of my many pet peeves with the whole tax game has long been how many people blindly accept the IRS’s pronouncements of how large the Tax Gap is in this country.  The Tax Gap is supposed to represent the difference between the amount of money the IRS is collecting and the amount they should be collecting if nobody was cheating on their tax calculations.  IRS has a vested interest in promoting this number as being extremely large, with the goal of encouraging our rulers in Congress to provide them more money in order to hire more employees to squeeze more money out of everyone.

Many years ago, after seeing the publicity around the hundreds of billions of dollars supposedly lost in the Tax Gap, I was sincerely interested in learning how this figure was being calculated by IRS.  We numbers people love to see the details of such large amounts.  Just like in grade school math back in earlier times, we want to see the work behind the end result.

I contacted various people in the IRS headquarters in DC and was passed around several times before I received an uncharacteristically honest explanation from one of them.  She admitted to me that there were no actual detailed calculations to support their widely publicized Tax Gap totals.  They had estimated everything.  I would prefer the term “guesstimated” or even WAG (Wild Ass Guess) to better represent the origins of their number.  To consider it as a SWAG (Scientific Wild Ass Guess) would probably be too generous an assessment.

I am revisiting this topic once again in response to this recent article from Fox Business, which shows some Republicans in Congress actually questioning the accuracy of the IRS’s “Tax Gap” figures.  With so many obvious lies coming out of every component of the Federal government, it’s more impossible than ever to trust anything we are told.

Top Republicans question tax gap figures as IRS enforcement beef-up hangs in limbo

It’s encouraging to see some push-back against the blind acceptance of obviously biased numbers from IRS and I hope IRS is forced to show their work before spouting off any more “sky is falling” hysterics about matters such as this.

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Offshore Tax Gap?

Posted by taxguru on September 13, 2009

US citizens in rush for offshore tax advice – Ohio CPA Dana Stahl forwarded this to me with the following message:

Mr Guru – Obama’s war on the rich in the USA continues.

While that is obviously true, what caught my attention was the following reference to my old bugaboo, the tax gap:

A Senate committee has estimated that the parking of assets offshore costs the US $100bn in lost taxes each year.

As I have been explaining for decades, any “tax gap” is by definition impossible to know with any certainty.  Any figure that is being bandied about has either been pulled out of some politician’s rectum or is merely a WAG (wild ass guess).  Of course, that’s SOP for our rulers in DC, as illustrated by the health care reform discussions. None of those figures has any relation to reality. 


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IRS Too Nice?

Posted by taxguru on September 15, 2008

From Ohio CPA Dana Stahl:

Mr Guru – thought you’d find this interesting, but full of bulls**t!

Has the IRS lost its appetite for collecting payroll tax?


My Reply:


That article sounds so similar to all of the other scare stories on the dreaded tax gap crisis, and about as accurate, using fabricated numbers as a justification for giving IRS more Draconian powers than they already have.



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Posted in IRS, TaxGap | Comments Off on IRS Too Nice?