The IRS needs more and consistent funding to help close a tax gap that is uncollected nearly$ 1 trillion in legally owed taxes every year, said IRS Commissioner Charles Rettig on Tuesday.
Since 2011 -- 2013, Rettig told the Senate Finance Committee that new sources of wealth have arisen since 2012, when the last official tax gap estimate of$ 441 billion was made, including cryptocurrencies and the rising use of complex, foreign-source income.
If you add them in, I think it would not be outrageous, that the actual tax gap could reach$ 1 trillion on an annual basis, Rettig said.
Rettig said the agency is being supported by increasingly sophisticated tax avoidance schemes and budget cuts have left it with about 17,000 fewer revenue enforcement staff than it had a decade ago.
He called on Congress to provide multi-year funding in consistent, timely and more reliable forms of funding.
The Biden government's fiscal 2022 budget request would boost the IRS budget by roughly$ 1.3 billion, or 10.4% over current levels. The proposed$ 13.2 billion IRS budget would include an additional$ 900 million for tax enforcement in fiscal 2022, which begins on Oct. 1.
The tax gap is claimed income, under-payment or non-payment of taxes owed and exaggeration of tax breaks such as deductions and credits.
One area that Rettig told senators would help capture unreported income would be reporting transactions in cryptocurrencies such as Bitcoin, similar to the way securities transactions are reported.
The use of 1099 forms to report these transactions would help the IRS to tax capital gains in cryptocurrency investments, which now have a market capitalization of approximately$ 2 trillion, Rettig said. What is the best way to describe a new word?