IRS nominee: Amount of unpaid US taxes unclear
By Jonathan Nicholson
WASHINGTON, March 30 (Reuters) - The man nominated to be the Internal Revenue Service's top lawyer says it's not clear how much in taxes the agency is allowing to go uncollected annually.
"I do not believe that it is possible to state with any degree of certainty either the current size of the gross tax gap or the relative sizes of its three main components," Donald Korb said in a written answer to questions from members of the Senate Finance Committee during his confirmation hearing earlier this month.
Korb, nominated to be the IRS' Chief Counsel, was approved by the panel Tuesday on a 21-0 vote.
The tax gap, defined as the amount of taxes imposed but not paid voluntarily and timely, has become an increasing subject of concern as the IRS comes under increased pressure to step up its enforcement efforts. After GOP-led hearings in 1997, the IRS shifted its resources to customer service, a move that critics say has left its collection ability waning.
In January, the National Taxpayer Advocate, an internal IRS watchdog office, put the gap at about $311 billion in 2001.
That figure, attributed to the IRS Office of Research, has since been taken as gospel by many, including lawmakers, but it has few expert defenders.
Tom Beers, senior research advisor in the Taxpayer Advocate's office, said the number is the best available but has several flaws, including being partially extrapolated from data and trends last measured in 1988.
The figure is probably way too conservative, according to Donald Alexander, a former IRS Commissioner and now a partner with law firm Akin, Gump, Strauss, Hauer & Feld LLP.
Alexander said his calculations, based on an old estimate of the compliance rates, put the gap at somewhere between $350 billion to $400 billion.
But Alexander said the idea of a tax gap - as an outline of where to focus enforcement energies - makes sense.
"You should have a rational idea of where the cheaters are and how they cheat," he said.
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