The Internal Revenue Service Oversight Board said that the agency still has a ways to go before fully reaching the vision outlined in the IRS Restructuring and Reform Act of 1998. The board's "foremost concern" remains the tax gap - estimated at $290 billion, according to 2001 tax returns.In 2006, the board examined a variety of recommendations to reduce the gap, finally concluding that there was no one "silver bullet" that will solve the problem. According to the board, reducing the tax gap requires a comprehensive set of strategies balancing prevention and correction - similar to the recommendations suggested by other groups. Among the board's recommendations are a simpler tax code, more complete information reporting to more IRS audit and collection personnel, and quality customer service. The IRS must also address information technology modernization and human capital challenges as it continues to modernize itself.

The board did credit the IRS with some "noteworthy" gains in the past year, such as an increase in enforcement activity and stable customer service levels.

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