Lawmakers Demand the IRS Release Its Delayed Tax Gap Estimate

The IRS's last published tax gap scorecard found $696 billion in federal taxes that were owed but not paid on time. Now Congress wants to know where the next one is.

A group of 47 Democratic lawmakers sent IRS CEO Frank Bisignano a letter demanding the agency release its delayed tax-gap estimate. They also want an explanation of any changes to the way the IRS calculates the number.

Politics surrounds the request. Measurement is a different problem. How much federal tax actually goes unpaid?

Think of the tax gap as an estimate, not a pile of overdue bills sitting in one database.

The IRS describes it as an estimate of the difference between the federal tax people and businesses truly owe and the amount they pay voluntarily and on time.

Nonfiling covers people or businesses that should file but do not. Underreporting covers income or tax that is missing from a filed return. Underpayment covers tax reported on a return but not paid by the deadline.

Some money arrives later through late payments and enforcement. Subtract those collections from the gross figure and you get the net tax gap.

A gross estimate does not mean every dollar is permanently lost. It does mean the government did not receive that money when it was due.

Estimating it requires completed returns, information reports, audit results, payment data, and statistical models. Underreporting is especially hard because researchers often need finished audits before they can estimate what was missing.

That creates an awkward tradeoff. A careful estimate can arrive years after the tax activity it describes. A faster estimate may depend more heavily on projections and assumptions.

Lawmakers say the IRS was supposed to release its next estimate last fall. An agency spokesperson said in October that the IRS was updating its methodology, but did not identify the changes or give a new release date.

Released in 2024, the most recent published estimate put the tax gap at $696 billion.

Lawmakers said the top 10% of taxpayers account for 64% of unpaid individual income taxes. They asked the IRS for more detail on unpaid tax tied to offshore activity, corporations, and high-income individuals.

Those categories are difficult to measure. Complex ownership, foreign accounts, pass-through entities, and income without routine third-party reporting can require more work than wages reported on a Form W-2.

Accountants should read beyond the headline total. Changes can come from taxpayer behavior, the economy, better data, or a revised model.

A bigger estimate does not automatically prove compliance got worse. A smaller estimate does not automatically prove enforcement solved the problem.

The lawmakers tied the delayed estimate to cuts in IRS enforcement capacity.

They said the agency has reduced staffing in its Global High Wealth Unit, dismantled its partnership audit group, weakened Criminal Investigation, and collected $3.5 billion less from audits last year. They argue that withholding the newest estimate makes it harder to judge the effect of those changes.

Those are the lawmakers' claims and conclusions. The management question is broader: Can the IRS measure where noncompliance sits, then put people and technology where they are most likely to recover money?

But the estimate cannot replace case-by-case enforcement. It is a map, not a list of named taxpayers and collectible balances.

The lawmakers asked Bisignano to release the estimate immediately and answer their questions by November 15.

For tax professionals, the next release will require two readings. The first is the total. The second is the fine print explaining what changed in the model.

Without that second reading, comparing two tax-gap estimates can create more heat than insight.

Government officials are already making enforcement choices. The newest public benchmark for judging those choices is still missing.

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