By Leonard Robinson

On April 13, IRS Commissioner Charles Rettig arrived on Capitol Hill with bad news for lawmakers. Roughly $1 trillion in federal taxes remains at risk of being unpaid, in large part due to errors, fraud, and lack of resources to properly collect balances from taxpayers.

The IRS chief, throughout his three-hour appearance to the Senate Finance Committee, explained that circumstances surrounding the “tax gap”, or the difference between taxes owed and taxes collected, have changed over the past year. As of last year’s reporting, which is set to be updated this year, was $441 billion.

It has been speculated by some that continued growth in foreign income and cryptocurrencies has been suspected as the culprit for the gap, reported the Wall Street Journal. Outside estimates, such as the Tax Law Center at New York University, predict roughly $7.5 trillion gap over the next decade.

During the 2019 fiscal year, the IRS collected more than $3.5 trillion in taxes as previous estimates showed that each additional dollar spent on enforcement could yield additional $5 to $7 in revenue.

President Biden’s budget proposal requests an additional 10% in revenue.

A growing tax gap has caused some worry among those on Capitol Hill, especially as the U.S. budget deficit widened to $1.7 trillion in the first half of the fiscal year as a third round of stimulus payments hit accounts. The deficit is double of what it was last year, in the earlier period of the coronavirus pandemic.

During the hearing, Commissioner Retting expressed frustration that the IRS is often “outgunned” by high-income earners and corporations and does not have the resources for enforcement.

“We’re down 17,000 enforcement personnel over the last decade,” said Retting. “We have about 6,500 frontline revenue agents who handle the most complex, sophisticated individual and corporate matters.”

Senator Elizabeth Warren, a member of the Senate Finance Committee, stated during the hearing that she would propose legislation that requires the IRS to be funded on a non-discretionary, multi-year basis with more enforcement resources.