The Trump administration has held up the publication of an annual Internal Revenue Service estimate of unpaid taxes, a delay that could mask the fiscal cost of the steep decline in the agency’s ability to audit the rich.
The I.R.S. has long published an estimate of the tax gap, the amount of tax owed under existing law that goes uncollected each year. The agency began releasing an estimate of the tax gap annually during the Biden administration, but under President Trump, it has yet put out an update. The current leader of the I.R.S., Frank Bisignano, has cast doubt on the metric and indicated he wants to focus instead on what he called the “addressable tax gap.”
The shift comes after the Trump administration pushed out roughly a quarter of the I.R.S. work force and cut the agency’s budget, weakening the government’s ability to conduct time-intensive audits. An inspector general report last month found that revenue collected from audits dropped by more than a third last fiscal year, a sign that the tax gap could be growing under Mr. Trump.
In its most recent projection, released in October 2024, the I.R.S. estimated that roughly $700 billion in owed taxes went uncollected in 2022, though the agency said it expected that roughly $90 billion of that would eventually be paid. The next estimate, for 2023, was scheduled for publication last fall, but has not been released.
The absence of an updated tax gap estimate is part of a pattern across the Trump administration, which has either stopped collecting or sought to change the measurement of federal data that scientists and other researchers have long relied on for a rigorous, unvarnished understanding of the country. The Pentagon declined to provide information to the nonpartisan Congressional Budget Office about the cost of the war in Iran, and last year the president fired the head of the Bureau of Labor Statistics, which produces the monthly job numbers, baselessly calling the labor market data “rigged.”
An I.R.S. spokesman said the agency was updating the methodologies used to calculate the tax gap and would release the figure when it was ready. Mr. Bisignano, in a statement, said revenue from tax enforcement was increasing this year and did not depend on the number of auditors.
“The I.R.S. is working smarter by using better data, advanced analytics, and technology like A.I. to address noncompliance more precisely, reduce false positives, and focus resources where they have the greatest impact,” Mr. Bisignano said in a statement. “The tax gap estimates are an important part of that work, but it is not a measure of current enforcement.”
In an email to I.R.S. staff on Tuesday, Mr. Bisignano said Vincent LaPadula, who joined the I.R.S. this summer from JPMorgan Chase & Company, would lead the agency’s work on the tax gap.
Since it covers 2023, the delayed report would not yet capture any change in tax compliance resulting from the Trump administration’s push to downsize the I.R.S. But the absence of the data could make it more difficult to assess whether more taxes were going uncollected after Mr. Trump took office.
“Without a metric of the tax gap that is telling us in real time about trends in compliance and how they’re changing, I worry that it’s hard for policymakers to see the full swath of the damage that’s been done by the gutting of the agency,” said Natasha Sarin, a Treasury official during the Biden administration who has written extensively about the tax gap. “And, in fact, I worry that’s the point.”
Beyond illustrating the extent and sources of tax noncompliance, the tax gap has also been a figure often cited to argue for giving more resources to the I.R.S. In 2021, Charles P. Rettig, Mr. Trump’s first-term pick to lead the I.R.S., speculated that the tax gap could be as much as $1 trillion a year, a figure much larger than the I.R.S. estimate at the time, as he called for a bigger budget for the agency.
For a time, there was bipartisan interest in giving the I.R.S. more resources to narrow the tax gap, since doing so generates more tax revenue for the government without having to raise taxes. That changed after Democrats approved an additional $80 billion for the I.R.S. in 2022. Republicans renewed their attacks on the agency and eventually clawed back much of the extra money. G.O.P. officials, cheered on by business groups, also began to question the reliability of the agency’s tax gap estimates.
“Republicans didn’t like that it really points the finger at the wealthy as being the problem,” said Barry Johnson, who previously oversaw the tax gap report as the chief data and analytics officer at the I.R.S.
The tax gap encompasses several types of unpaid taxes. It includes taxes that are simply late in being paid, as well as taxes that are uncollected as a result of people not filing a tax return. But most of the gap comes from people who file a tax return but do not report all of their income to the I.R.S., intentionally or not.
The agency has consistently found that income independently reported to the I.R.S., like wages, is rarely underreported, while income without third-party verification, like business profits, often goes unreported. Overall, 85 percent of owed taxes were paid voluntarily and on time in 2022, the I.R.S. said.
Still, the tax gap is somewhat imprecise, since I.R.S. analysts are estimating taxes owed on income that is not revealed to the agency. To do so, the I.R.S. conducts a statistical sample of intensive audits, and then extrapolates the rates of noncompliance it finds to the taxpayer population more broadly. Previously, the agency released a new tax gap estimate every few years, but during the Biden administration it started providing an annual update, responding to requests from lawmakers of both parties for more regular data.
Pooling together enough audit results takes time, though, and so the I.R.S. relies on the results from older samples to project noncompliance for a given year — and then updates the numbers as more recent data becomes available. For example, the 2022 estimate of the tax gap is based on noncompliance rates observed in tax filings from 2014 through 2016. Alan Plumley, a retired I.R.S. analyst who worked on the tax gap, said that methodology meant that an annual headline figure was not particularly meaningful.
“Doing random audits has become a luxury where in the past they had been viewed as a necessity,” he said. “If people realized how soft the tax gap estimates are, they would realize they shouldn’t be putting a lot of weight on the estimated total.”
In appearances before Congress in the spring, Mr. Bisignano, the first chief executive officer of the I.R.S., suggested that he was skeptical of the methodology behind the tax gap, saying that he wanted to focus on the subset of unpaid taxes that the I.R.S. could realistically collect.
“What I’ve seen is nobody’s ever worked on the tax gap,” Mr. Bisignano, who is also the commissioner of the Social Security Administration, said in April. “And we need to decide what is the addressable tax gap and we need to go get it.”
Former I.R.S. officials said that focusing limited resources on easier-to-collect taxes made sense and reflected current practice, since closing the tax gap entirely would be an enormous undertaking. Still, if the I.R.S. adopted a new standard for publicly reporting the tax gap, they said, it should also continue publishing estimates using the previous methodology, so that researchers can see trends.
And Mr. Bisignano has not yet defined what he considers “addressable,” a key point given that what is achievable for the I.R.S. depends on the budget and tax laws approved by Congress.
“The devil is in the details of what you’re describing as ‘addressable’ versus not,” said Daniel Werfel, who was tapped by President Joseph R. Biden Jr. to lead the I.R.S. and stepped down in 2025.
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