America’s Tax Gap Projected to Hit Nearly $700 Billion: IRS

The tax gap—the difference between what is owed and paid to the government—widened to $696 billion in tax year 2022.

Federal tax forms at the IRS in Chicago on Nov. 1, 2005. Scott Olson/Getty Images

The federal government is losing hundreds of billions of dollars annually in tax revenue, with the main culprit being underreporting by taxpayers, according to the IRS.

The tax gap “reflects the difference between projected ‘true’ tax liability and the amount of tax that is actually paid on time,” the IRS stated.