IRS mismatches contribute to tax gap

The Internal Revenue Service is not doing enough to match incorrect or missing identification numbers on income and wage statements with existing tax accounts, charged the Treasury Inspector General for Tax AdministrationThe TIGTA noted that in tax year 2004 alone, the IRS received about 3.8 million income statements reporting approximately $150 billion in earnings that could not be matched to a filed tax return because of missing or erroneous ID numbers. Compared to 2001, that represented a 63 percent increase.

TIGTA said that the information needed to be better matched in order to reduce the estimated $345 billion tax gap. It recommended that the IRS increase its use of automated systems to resolve the mismatches. The IRS, however, said that the effort would cost more than it was worth.

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