IRS: Growing gap between US income taxes owed and paid

Category : Business

Unlocking Word Meanings

Read the following words/expressions found in today’s article.

  1. project / prəˈdʒɛkt / (v.) – to estimate the amount or number of something in the future based on current data
    Example:

    Based on the current market trend, the investment is projected to have a 6% annual return.


  2. gross / groʊs / (adj.) – the total amount of something before other costs, such as taxes and expenses, are taken away
    Example:

    The job’s gross pay per month is $2,000. But after taking away payment for taxes and health insurance, you’ll be left with $1,750.


  3. infusion / ɪnˈfyu ʒən / (n.) – the addition of something, such as money, that’s needed by another group, company, etc.
    Example:

    The $1,000,000 infusion made the charity more financially stable.


  4. audit / ˈɔ dɪt / (v.) – to examine the financial records or accounts of a person, business, organization, etc. to make sure that they are correct
    Example:

    They hired independent accountants to audit the company’s finances for this fiscal year.


  5. disproportionate / ˌdɪs prəˈpɔr ʃə nɪt / (adj.) – too large or too small compared with something else
    Example:

    The committee is investigating the disproportionate funds allotted to military expenses.


Article

Read the text below.

The amount of income tax money owed but not paid to the IRS is projected to grow, the agency said.


For tax years 2014 through 2016, the estimated gross “tax gap” rose to $496 billion a year, an increase of more than $58 billion from prior estimates. IRS data released in October projects that for 2017 to 2019, the estimated average gross tax gap will be $540 billion per year.


Ensuring that people actually pay their taxes is one of the tax collection agency’s biggest challenges.


“The vast majority of taxpayers strive to pay what they owe on time,” IRS Commissioner Chuck Rettig said in a statement. “Those who do not pay their fair share ultimately shift the tax burden to those people who do, which fuels the tax gap.”


He said the agency will, among other things, focus on “those who avoid their legal responsibilities.”


Biden administration officials have said that part of the money from a recent $80 billion infusion for the IRS from the so-called Inflation Reduction Act will be used to help audit high-income earners who do not pay their full tax liability.


Treasury Secretary Janet Yellen said at a Maryland IRS field office in September that the tax gap is estimated to be $7 trillion in full over the next decade.


“And since the IRS has lacked the resources to effectively audit high earners — whose audits are more complex and take more time — these high earners are responsible for a disproportionate share of unpaid taxes,” she said.


Republicans have claimed the IRS will be targeting the taxes of working-class Americans with armed auditing agents. Those claims are misleading.


This article was provided by The Associated Press.


Viewpoint Discussion

Enjoy a discussion with your tutor.

Discussion A

  • How would you describe the collection of taxes in your country (ex. efficient, ineffective)? Discuss.
  • Do you think taxes are being put to good use in your country? Why or why not? Discuss.

Discussion B

  • What do you think should be done to people or institutions caught not paying taxes correctly (ex. be fined, be jailed)? Why? Discuss.
  • Which sector do you think should receive the highest fund from people’s taxes (ex. education, health)? Why? Discuss.
Category : Business