U.S. Rep. Bill Pascrell, Jr. (D-NJ-09), the Ranking Member of the House Ways and Means Subcommittee on Oversight, has written to Internal Revenue Service (IRS) Commissioner Danny Werfel to urge the agency to step up its efforts to address and understand the ballooning national tax gap, according to a prepared statement on April 13, 2023.
“The American people must have faith that our tax system is administered lawfully, competently, and fairly. Closing the tax gap must be a priority for the IRS, and that starts with fully understanding how wealthy tax evaders are exploiting our system,” Congressman Pascrell wrote the IRS boss.
Thanks to funding provided by the Inflation Reduction Act (IRA) enacted by congressional Democrats in the 117th Congress, the IRS has the resources to prioritize closing the growing tax gap by ensuring wealthy tax scofflaws and big business tax cheats pay their fair share. But as Pascrell notes in his letter, our latest net tax gap estimate of $428 billion is based on data from over seven years ago and fails to capture several sources of noncompliance, especially among wealthy taxpayers and corporations. A recent Treasury Inspector General for Tax Administration investigation identified serious shortcomings in the methodology and data sources used to calculate several components of the tax gap.
As Chairman of the Subcommittee on Oversight in the 117th Congress and Ranking Member in the 118th Congress, Pascrell has made fixing the IRS with a focus on fairness his top priority. On February 18, 2021, in the Oversight panel’s first hearing of the new Congress, Pascrell convened a hearing on “Free Tax Preparation Services During the Pandemic” to examine ways to make tax time easier for working Americans.
On December 8, 2021, Pascrell convened a hearing on “Tax Havens in America and Hidden Wealth” to investigate ways the wealthy avoid paying their fair share. On February 8, 2022, Pascrell held a hearing on “Challenges Facing Taxpayers in the 2022 Filing Season” with the National Taxpayer Advocate. On May 18, 2022, Pascrell convened a hearing on “Tax Fairness and the IRS” where he unveiled a GAO report written at his request that found plummeting audit rates over the last decade, disproportionately benefiting wealthy Americans.
On March 9, 2023, Pascrell praised the confirmation of Daniel Werfel as the new Commissioner of the IRS. That same day, Pascrell led fellow Democratic members of the Oversight Subcommittee in a letter to IRS Commissioner Daniel Werfel urging him to direct IRA funding toward overhauling the agency’s entire auditing regime to ensure wealthy tax scofflaws and big business tax cheats pay their fair share. On March 10, 2023, Pascrell asked Secretary Janet Yellen about his letter during her testimony before the Ways and Means Committee, where she expressed a commitment to addressing his concerns.
On April 6, 2023, Pascrell praised the IRS spending plan to drastically improve operations, taxpayer services, and enforcement through the historic investment passed by congressional Democrats in the Inflation Reduction Act.