Americans avoided paying taxes on a record $1 trillion in income in 2003, according to a new federal government report.

The annual study by the Commerce Department's Bureau of Economic Analysis shows the gap between actual income and the amount Americans reported on income-tax filings has increased 35 percent between 2000 and 2003, a period when tax rates were falling. In the previous four decades, the gap has increased when taxes were raised and contracted when rates were lower.

For 2003, the most recent year for which data are available, the agency estimated Americans earned $1 trillion more in personal income than they reported to the Internal Revenue Service, up from $943.2 billion in 2002 and $760.1 billion in 2000. The $1 trillion is 14.4 percent higher than the amount of adjusted gross income reported to the IRS on tax returns.About $423.7 billion of the $1 trillion income reporting gap in 2003 can be attributed to faulty or omitted information on tax returns, economist Mark A. Ledbetter said in the report. There are no easily identifiable explanations for the remaining $617.9 billion, he wrote.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access