Washington, D.C.--At a U.S. Senate Finance Committee hearing with Internal Revenue Service’s (IRS) Commissioner Rettig, Ranking Member Mike Crapo (R-Idaho) reiterated his request for detailed information on the IRS’s recent “tax gap” estimates. “When you testified earlier before the committee, you estimated that the tax gap could be as high as $1 trillion dollars. . . You mentioned that some of the reasons for the increase in the tax gap estimate from ten years ago were inflation, cryptocurrency, and unreported or concealed income offshore and in pass through entities. I’d like to ask you to parse out how you get to that $1 trillion figure in terms of where we’re losing the collections of lawfully-due taxes so that we can have a better idea of how we can assist you in getting those taxes collected.”
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Senator Crapo sent a letter to IRS Commissioner Rettig on May 10 asking questions designed to better understand the speculative $1 trillion figure, such as: how much of the $1trillion is attributable to inflation since the prior estimate; how much of the$1 trillion is attributable to untaxed cryptocurrency holdings; how much of the$1 trillion is attributable to unreported or concealed income offshore and in pass-through entities; and whether the IRS needed to make corrections to an unreviewed study on the percentage of federal income taxes unpaid but owed by the top 1percent.
The IRS sent a response letter to Senator Crapo on June 7 that provided incomplete, indirect and/or partial answers to his questions. At today’s hearing, Senator Crapo reiterated his request for further information explaining the estimate, as well as detailed responses to questions he had submitted for the record following an April 13 hearing with the IRS.