IRS Estimates $345 Billion Tax Gap

The Internal Revenue Service said that unpaid taxes amounted to $345 billion in 2001, due mostly to underreporting of taxes owed.

The statistic refines an estimate released last year that found taxpayers failed to pay between $312 billion and $353 billion in 2001.

Late payments and IRS collections will recover about $55 billion in unpaid taxes, leaving a net gap of about $290 billion.

The IRS estimated the tax gap, the difference between taxes owed and taxes paid, after auditing 46,000 people and combining those findings with previous estimates of unpaid corporate, payroll and unemployment taxes.

IRS Commissioner Mark Everson said complex tax laws played a significant role.

"Helping taxpayers better understand their obligations under the current tax law will facilitate compliance, but simplifying the tax code would have a big impact on reducing the tax gap," he said.

President Bush offered several ideas for reducing the gap between taxes owed and taxes paid in his budget, recently submitted to Congress.