For sale by the Superintendent of Documents, U.S. Government Printing Office LL KF 26 .F5 Grassley, Hon. Charles E., a U.S. Senator from Iowa, chairman, Committee Baucus, Hon. Max, a U.S. Senator from Montana AGENCY WITNESSES Gardiner, Pamela J., Acting Inspector General, Treasury Inspector General for Tax Administration, Washington, DC Everson, Hon. Mark, Commissioner, Internal Revenue Service, Washington, WITNESSES Brown, Dale, taxpayer who engaged in an offshore tax shelter, Incline, NV, BRIDGING THE TAX GAP WEDNESDAY, JULY 21, 2004 U.S. SENATE, COMMITTEE ON FINANCE, Washington, DC. The hearing was convened, pursuant to notice, at 10:40 a.m., in room SD-215, Dirksen Senate Office Building, Hon. Charles E. Grassley (chairman of the committee) presiding. Also present: Senators Thomas, Baucus, Conrad, and Lincoln. OPENING STATEMENT OF HON. CHARLES E. GRASSLEY, A U.S. SENATOR FROM IOWA, CHAIRMAN, COMMITTEE ON FINANCE The CHAIRMAN. The hearing will come to order. This hearing is to consider what still is a very serious subject: the tax gap and ways to close the tax gap. As members of the Finance Committee know, that gap is the difference between the amount of tax due and owing versus the amount actually collected. Due to a number of factors, especially the war and increased spending, our Nation is looking at deficits. At the same time, the administration and many in Congress do not want to increase the tax burden on the vast majority of honest citizens who pay their fair share of taxes. Therefore, we must look at ways of dealing with the tax gap to bring revenues to the Treasury and fairness to the Tax Code. This is even more important as we look to the fall, where we will hopefully have conferences concluding on several issues, each of them with a significant demand for possible new revenue raisers. In addressing the problem of the tax gap, we have to recognize that we have finite resources and that we are not going to place a heavy burden on honest taxpayers. We must retain the balance, and a proper balance, of service and enforcement, coupled with the respective taxpayers' rights. To achieve that, it is clear that we have to work smarter and more efficiently. We have to target limited resources where they do the most good. This hearing provides the Finance Committee that opportunity to consider both what the IRS is doing to address the tax gap, and also learn about new ideas and innovations that are being implemented, or could be implemented, at the State level that are being proposed by witnesses today. I now turn to one of the most consistent members of the committee on this issue of tax gaps because he has spoken out on it so many times, particularly as he questions people who are being |