Sen. Carper Introduces Taxpayer Advocacy Bill

Legislation would reduce federal budget deficits and reduce tax compliance burdens for taxpayers

WASHINGTON – Today, Sen. Tom Carper (D-Del.), a member of the Senate Finance Committee and the Chair of the Senate Subcommittee that oversees Federal Financial Management, introduced legislation aimed at reducing record federal budget deficits while lowering tax compliance burdens on law-abiding taxpayers. The Taxpayer Advocacy and Government Accountability Promotion (TAX GAP) Act promotes both fiscal responsibility and taxpayer fairness, while cracking down on delinquent taxpayers. Sens. Evan Bayh (D-Ind.) and Barbara Boxer (D-Calif.) are cosponsors of Sen. Carper’s bill.


In 2001, the last year the Internal Revenue Service estimated the "tax gap" — the difference between what taxpayers owe and what they actually pay — the figure stood at $345 billion, or $290 billion after subtracting subsequent enforcement efforts and late payments.  Despite some recent successes in improving tax compliance, the tax gap has certainly grown since 2001.   Most of the tax gap is caused by taxpayers who deliberately or accidentally underreport their taxable income.


"As we continue to develop a culture of thrift within our government, it’s always best to go after the low-hanging fruit first," said Sen. Carper. "Reducing the tax gap is a common-sense approach to combating our nation’s mushrooming deficit. Millions of Americans pay their taxes properly and on-time. However, those who fail to pay their fair share not only create a burden that our economy simply cannot sustain but they force their fellow Americans who play by the rules to pay more in taxes. My bill takes the necessary steps to cracking down on lawbreakers, which will lower costs for law-abiding Americans and reduce our deficit."


The overwhelming majority of Americans comply with tax laws.  However, because a limited number of taxpayers shortchange the Treasury, they deprive the nation of sufficient funds to pay for everything from national defense to education to Social Security — ultimately increasing the deficit and, in the long run, making everyone else’s tax rates higher than necessary.


To reduce the unfair burden of higher deficits and higher taxes on law-abiding taxpayers and small businesses, the TAX GAP Act cracks down on noncompliant filers by enacting a dozen common-sense provisions to enhance information reporting, improve tax return forms, and crack down on tax avoidance by government contractors.  The bill includes provisions that have been proposed both by President Obama as well as former President Bush in their annual budgets, and also incorporates a range of new proposals — all of which will reduce the tax gap while avoiding undue burdens on law-abiding taxpayers.


In addition, the bill requires the Treasury Department and the IRS to examine ways to simplify tax forms and reduce the costs of filling out tax forms, particularly for small businesses. Provisions in the bill are also expected to encourage the IRS to improve its data matching and auditing systems to identify noncompliant taxpayers, which will result in fewer taxpayers being subjected to unnecessary audits.