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IRS: Tax evaders may be costing U.S. $1 trillion a year

The head of the IRS calculated that tax evasion in the U.S. may total $1 trillion a year, a figure that is multiples higher than previous estimates from the federal government.

Internal Revenue Service Commissioner Chuck Rettig told a Senate panel Tuesday that previous tallies of the tax gap — which came to a cumulative amount of about $441 billion for the three years through 2013 — didn’t include some tax evasion-techniques that weren’t on their radar at the time.

New estimates include the use of cryptocurrency, he said. Offshore tax evasion, illegal income that goes undetected by the IRS and underreporting from pass-through businesses also contribute to a larger than previously known tax gap, Rettig said.

“I think it would not be outlandish to believe that the actual tax gap could approach and possibly exceed $1 trillion per year,” Rettig told the Senate Finance Committee.

The ballooning difference between the tax dollars owed and what is actually collected by the IRS is an increasing point of focus on Capitol Hill, where a rising number of lawmakers are coming to see more aggressive tax enforcement as a way to boost government revenue.

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