IRS Projects Tax Gap Will Reach $688 Billion in 2021, Underscoring Need for Enhanced Enforcement

The gap between taxes owed and paid to the IRS is projected to grow significantly, reaching $688 billion for 2021 and $601 billion for 2020.

The IRS sees rising tax gap estimates as underscoring the importance of enhanced compliance efforts.

Funding from the Inflation Reduction Act will help the IRS focus on high-income individuals, partnerships and corporations.

Estimates don't account for potential behavioral changes during the pandemic that could impact the tax gap.

After late payments and enforcement efforts, the 2021 net tax gap is projected at $625 billion.