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High Risk Issue


View Detailed Plan

Enforcement of Tax Laws

Problem: Every year an unacceptably large amount of tax that should be paid is not, causing a persistent tax gap and forcing compliant taxpayers to bear a disproportionate share of the revenue burden.

Goal: Increase taxpayer compliance and reduce the tax gap.


  • Reduce the opportunity for evasion.

    • Propose legislation changes targeted at information reporting, compliance by businesses, and strengthening tax administration.
  • Target specific areas of noncompliance and improve voluntary compliance with extensive research.

    • In FY 2008 compliance studies will be completed on S corporations and individuals; in FY 2009 updates to the payment and filing compliance estimates of the tax gap will be completed.
    • Research the effect of service and its relationship to taxpayer compliance. In addition, survey taxpayers to see the relationship between complexity, burden and compliance to improve workload selection formulas, and reduce the burden of unnecessary taxpayer contacts.
    • Assess outreach and education awareness campaigns that target the Earned Income Tax Credit (EITC) eligible and non-compliant population, and adjust as necessary to increase participation and improve compliance. In FY 2009, activities from the fourth year of the EITC Return Preparer Study will be completed and short-term outcomes will be analyzed, including penalties and accuracy of returns, and the effect of due diligence visits, education/compliance notices and phone calls to first-time EITC preparers.
  • Improve information technology through modernization.

    • Execute the following initiatives: In FY 2008 and FY 2009 the process to match information documents to information on a tax return and improved case selection and scoring will be reengineered. In FY 2009 data storage facilities will be enhanced to improve the workload identification. In FY 2009 automated lien delivery will be deployed. In FY 2009 new and improved analytics will be developed that identify issues and select cases for all types of audits.By FY 2009 features will be built and implemented for an electronic transmission capability for additional tax forms on Modernized electronic filing (MeF). In FY 2009 the Broker Compliance Initiative pilot will be used to identify and address tax schemes of individuals and businesses.
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