Max Baucus: “I have repeatedly raised the problem of the ever-growing Federal tax gap. What is that? The tax gap is the difference…”

“I have repeatedly raised the problem of the ever-growing Federal tax gap. What is that? The tax gap is the difference between taxes legally owed and taxes actually paid. That gap is $345 billion a year, and it is growing. That is right. Every year, about $345 billion in taxes legally owed is not paid--$345 billion a year. One of the things that contributes significantly to the tax gap is confusion. Many taxpayers simply claim credits or deductions by mistake, and that error rate is about to get worse. As IRS Commissioner Everson pointed out in a Finance Committee hearing this month, the IRS and taxpayers will face unnecessary confusion and compliance errors if Congress does not finish its changes to the tax law soon. Taxpayers will face more mistakes and hassles if we do not extend the expired tax provisions soon. ``Soon'' means prior to October 15, according to Commissioner Everson. If Congress does not reinstate the expired tax incentives before it recesses for the election, then the IRS will have to print tax forms for next year's filing season applying the law ``as is.'' That means reprint; more expense. The IRS will print the forms without the tax credit for U.S.-based research jobs, without the tax deduction for State sales taxes, without the tax credit for hiring welfare workers, and without the tax deductions for classroom supplies that teachers buy--without those deductions.”