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Treasury is targeting tax evaders, cryptocurrencies in plan to bring in additional $700 billion

Tax Season Begins
Posted at 11:38 AM, May 21, 2021

The Treasury Department is planning to crack down on tax cheats, and hopes the efforts will raise an additional $700 billion for the government.

In a report publishedThursday, the agency outlined several policies they are working on that aim to close the so-called “tax gap”; the difference between what taxpayers owe to the federal government and what they actually pay.

“Nearly $600 billion of taxes went unpaid in 2019.

The number will rise to about $7 trillion over the next decade if unaddressed—roughly equal to 15% of taxes owed,” the Treasury Department tweeted.

Sometimes the discrepancies are done intentionally to evade paying more taxes, and sometimes they are unintentional when taxpayers classify revenue or payments incorrectly.

Some of the changes include new tools for auditors, increasing the IRS’s budget to allow for more audits and agents, and new rules for reporting purchases with cryptocurrency.

The department says one of the main reasons for the increasing tax gap in this country is “insufficient resources.”

They say the IRS’s budget has been cut over the past decade and that has cut “IRS capacity to address sophisticated tax evasion efforts. Over this period, audit rates for taxpayers making over $1 million in income have fallen by almost 80%.”

Some of the proposed changes require congressional approval. The White House has argued for approval of the measures, saying the proposed budget increases will be paid off by allowing the agency to collect more taxes that are due to the government.

The Treasury Department’s Office of Tax Analysis estimates that the changes they are proposing could bring in an additional $700 billion over the next decade, and potentially another $1.6 trillion in the decade after that.

“Working to close the tax gap reflects a commitment to ending our two-tiered tax system, one where most American workers pay their full obligations, but high earners who accrue income from opaque sources often do not,” the agency’s report states.

Treasury says the increase in oversight and audits “will not rise relative to recent years” for those who earn less than $400,000 a year.