Impact of Tax Fraud
The IRS estimates that tax fraud, evasion, and underpayments directly result in the Federal Government collecting $450 to $500 billion less in tax revenue each year. This gap must be bridged by either cutting funding for federal programs or by increasing the burden on law‐abiding U.S. taxpayers to generate more revenue.
This type of fraud is difficult to detect and even harder to prove because the authorities must show that the underpayment was intentional. This could be difficult in large companies where accounting and records keeping procedures are complex and easily manipulated. Often, only company insiders know the true story of why or how a corporation cheated the authorities by using shell companies or hiding funds in international tax havens such as Panama to conceal their true earnings. In fact, international tax schemes may be costing the federal government (and American taxpayers) as much as $160 billion every year. The IRS lacks the resources to uncover these sophisticated scams and relies on whistleblowers to help them through the investigations.