Many people repeatedly overpay their taxes. While reducing the tax gap seems a laudable goal, reducing this reverse tax gap should also be prioritized.
It seems clear that we should enforce our tax laws. And enforcement is the job of the executive branch, including the IRS. The mission of the IRS is to "provide America's taxpayers top-quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all."
Perhaps it's that sense of service that leads to this interesting comparison. In the fiscal year 2020, the IRS closed 452,515 individual income tax examinations yielding about $5.5 billion in recommended additions to tax, an average of $12,230 per examination. Yet, 16,305 of its closed examinations — on individual returns spanning the full spectrum of income levels — resulted in recommended refunds of more than $813 million.
Yet, even within that select group, there were, in fact, thousands of returns in which the examined taxpayers overpaid their taxes to the tune of more than $800 million. Imagine how that extrapolates into the general population of returns.The tax gap is real but so, too, is the reverse tax gap.
But there also are many tax professionals who function in a more administrative role, taking information from clients and simply inputting it into the appropriate tax forms.Overpaying capital gain taxes because of improper tax-basis calculations or records;Not taking advantage of deductions for charitable contributions and expenses;
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