In April 2021, IRS Commissioner Charles Rettig estimated that the tax gap—the difference between the taxes that are owed and the taxes that are actually paid—“could approach and possibly exceed $1 trillion” each year.1 Commissioner Rettig attributed much of the growing tax gap to the lightly regulated cryptocurrency sector, foreign-source income and the abuse of passthrough provisions.2 As some taxpayers continuously develop ever more sophisticated methods of tax evasion, it has become increasingly difficult for the IRS to maintain strong enforcement efforts, particularly as its budget and staffing levels have been slashed in recent years.

Read the issue brief here.