Just one week after the Treasury Department released a report on its strategy for closing the $300 billion tax gap, the ranking minority member of the Senate Finance Committee labeled the plan “incomplete” and not credible.Sen. Max Baucus, D-Mont., said he would continue to hold up the nomination of Eric Solomon as the assistant Treasury secretary for tax policy.

Baucus had been holding up Solomon’s nomination until the Treasury drafted a plan for attacking the annual tax gap -- the difference between taxes owed and what is actually collected.

Baucus offered a compromise to allow the nomination to go forward provided Treasury Secretary Henry Paulson fill in some of the plan’s details before the Finance Committee, a offer that was rejected.

The Treasury report says that the details of the tax gap strategy are contingent upon the budgeting process, but that both the Treasury and the Internal Revenue Service would provide a detailed outline of steps after the release of the 2008 fiscal-year budget request early next year.

The “four key principles” the Treasury said would guide strategy development include:
• Addressing unintentional taxpayer errors and intentional taxpayer evasion;

• Targeting, with specificity, sources of noncompliance;

• Combining enforcement activities with a commitment to taxpayer service; and,

• Crafting policy positions and compliance proposals that are sensitive to taxpayer rights, while maintaining an appropriate balance between enforcement activity and imposition of taxpayer burden.

The full report is available at www.treas.gov/press/releases/reports/otptaxgapstrategy%20final.pdf.

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