With a Congress and an administration too fond of tax cuts and spending to solve the growing budget deficit, the tax gap has become a more convenient focus for deficit reduction. With the tax gap, the Congress can urge action by the Internal Revenue Service without having to figure out what to do itself.The IRS estimates that the tax gap is $345 billion, which, if collected, could make a significant dent in the projected annual deficit, which is now approaching $500 billion.

Yet, even while pushing some of the deficit reduction burden off to the IRS, Congress is also making it difficult for the IRS to reduce the tax gap most efficiently. Budget restraints on the IRS have resulted in the agency not being able to spend as much on enforcement as it would like, even though dollars spent on enforcement are more than offset by increased revenue.

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