Distilling the nation's complex tax code is the key to reducing the $290 billion tax gap, the American Institute of CPAs told lawmakers. In a hearing before the House Small Business Committee, James Brennan, chair of the AICPA's IRS Practice and Procedures Committee, said simplification should be the foundation to begin stripping away the mammoth deficit.

"Of the various strategies under discussion by Congress, we believe that tax simplification should be a major focus for reducing the tax gap," Brennan told committee members.

The hearing intended to examine how to close the tax gap without creating burdens for small business. Regarding proposals on tax penalties as a way of reducing the gap, Brennan said, "We are concerned that many of these civil penalty proposals are being raised by Congress and the administration in a narrow, rifle-shot perspective. Instead, we believe greater levels of tax compliance could be achieved among the public if Congress established a broad legislative oversight process."

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