I 

117TH CONGRESS 

1ST SESSION H. R. 1116 

To provide for increased audits, improved technology infrastructure, and increased staff for the Internal Revenue Service for the purpose of reducing 

the tax gap, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 18, 2021 

Mr. DEFAZIO (for himself, Ms. SCHAKOWSKY, Mr. SMITH of Washington, Ms. 

NORTON, Ms. TLAIB, Ms. BONAMICI, Ms. OMAR, Mr. VELA, Ms. 

JAYAPAL, Mr. BEYER, Ms. OCASIO-CORTEZ, Mr. GARAMENDI, Mr. JOHNSON of Georgia, Mr. DOGGETT, Mrs. NAPOLITANO, Mr. HASTINGS, Ms. 

SCANLON, Mr. JONES, Mr. MCGOVERN, Mr. GARCI ́A of Illinois, Mr. CARSON, Mr. COOPER, Mr. COHEN, Mr. RASKIN, and Mr. KHANNA) introduced the following bill; which was referred to the Committee on Appropriations 

A BILL 

To provide for increased audits, improved technology infrastructure, and increased staff for the Internal Revenue 

Service for the purpose of reducing the tax gap, and 

for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘IRS Enhancement and 

5 Tax Gap Reduction Act of 2021’’. 


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1 SEC. 2. FINDINGS. 

2 Congress finds the following: 

3 (1) According to the Office of the Taxpayer Ad4 vocate, the difference between tax liabilities owed to 

5 the Internal Revenue Service and those liabilities ac6 tually collected by the IRS, known as the ‘‘tax gap’’, 

7 averaged roughly $381,000,000,000 annually in un8 paid taxes from 2011 to 2013. 

9 (2) Recent studies project that the tax gap will 

10 be a cumulative $7,500,000,000,000 between 2020 

11 and 2029. 

12 (3) Between 2010 and 2018, the share of indi13 vidual income tax returns it examined fell by 46 per14 cent, and the share of corporate income tax returns 

15 it examined fell by 37 percent. 

16 (4) Individual income taxes are the largest 

17 group of uncollected taxes before audits, rep18 resenting about $314,000,000,000. 

19 (5) Estimates suggest that at least 70 percent 

20 of the tax gap comes from underpayment by the top 

21 1 percent. 

22 (6) In 2020, the Treasury’s Inspector General 

23 for Tax Administration announced that roughly 

24 880,000 high-income individuals who didn’t file tax 

25 returns between 2014–2016 failed to pay more than 

26 $45 billion in owed liabilities. Of those 880,000 


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1 cases, more than 325,000 were closed without ever 

2 being entered into the Internal Revenue Service’s 

3 (IRS) enforcement system, more than 40,000 cases 

4 were entered but were then subsequently closed 

5 without ever being worked on, and the remaining 

6 500,000 cases are ‘‘sitting in one of the collection 

7 function’s inventory streams and will likely not be 

8 pursued as resources decline’’. 

9 (7) In 2011, more than 12 percent of individ10 uals making $1,000,000 or more annually were au11 dited. In 2018, only 3.2 percent of such individuals 

12 were audited. 

13 (8) For 8 years in a row, IRS tax enforcement 

14 has declined. The IRS audited 0.45 percent of per15 sonal income-tax returns in fiscal year 2019, the 

16 lowest level in at least 4 decades. 

17 (9) Individuals are about half as likely to be au18 dited now compared to 2010. 

19 (10) Audit rates for those making $10,000,000 

20 or more fell from more than 14 percent in 2017 to 

21 roughly 6.5 percent in 2018. 

22 (11) Over the course of the past decade, the 

23 number of income tax returns has increased by 

24 roughly 9 percent. 


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1 (12) Audit rates for the largest corporations in 

2 2011 were more than 90 percent. Now, they are 

3 closer to 50 percent. 

4 (13) The corporate share of Federal tax rev5 enue has dropped by more than two-thirds in the 

6 past 65 years. 

7 (14) In 2010, corporate taxes accounted for 9 

8 percent of Federal revenue. 

9 (15) The Tax Cuts and Jobs Act has pushed 

10 business taxes to record lows, and, according to the 

11 Institute on Taxation and Economic Policy, 91 of 

12 the Fortune 500 companies paid $0 in income tax 

13 in 2018 despite turning a profit. 

14 (16) According to a report from the Office of 

15 the Taxpayer Advocate, the average United States 

16 household is paying an annual surtax of more than 

17 $3,000 to subsidize taxpayers who aren’t paying all 

18 that they owe. 

19 (17) According to the Congressional Budget Of20 fice, the IRS’s budget is roughly 20 percent below 

21 its peak 2010 inflation-adjusted budget. 

22 (18) According to the IRS, the agency has lost 

23 roughly 30,000 full-time positions since 2010, more 

24 than 20 percent of its staff. 


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1 (19) The amount of IRS funding and staff allo2 cated to enforcement activities has declined by about 

3 30 percent since 2010. 

4 (20) According to the IRS, roughly 30 percent 

5 of its workers will retire within the next 5 years. 

6 (21) Despite this, the agency has also seen in7 creased workload due to the implementation of the 

8 Affordable Care Act, the Tax Cuts and Jobs Act, 

9 and the COVID–19 pandemic. 

10 (22) Studies have shown that investing in en11 forcement and tightening rules could generate more 

12 than $1,000,000,000,000 over a decade. 

13 (23) The Federal Government estimates that 

14 each additional dollar spent on tax enforcement 

15 could yield more than $4 in revenue. 

16 (24) IRS data demonstrates that an extra audi17 tor-hour spent auditing returns for those earning 

18 $5,000,000 or more raises nearly $5,000. 

19 (25) In fiscal year 2018, the IRS collected 

20 nearly $3,500,000,000,000 on a budget of about 

21 $11,430,000,000. 

22 (26) The Congressional Budget Office estimates 

23 that increasing the IRS’s funding for examinations 

24 and collections by $20,000,000,000 over 10 years 

25 would increase revenues by $61,000,000,000, and 


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1 that increasing such funding by $40,000,000,000 

2 over 10 years would increase revenues by 

3 $103,000,000,000. 

4 SEC. 3. IMPROVING RESOURCES AVAILABLE TO THE INTER5 NAL REVENUE SERVICE TO REDUCE THE TAX 

6 GAP. 

7 (a) IMPROVING AUDITS.— 

8 (1) IN GENERAL.—There is appropriated 

9 $5,000,000,000 for an additional amount for the 

10 ‘‘Department of the Treasury—Internal Revenue 

11 Service—Enforcement’’ account, for each of fiscal 

12 years 2022 through 2031— 

13 (A) for the salaries and expenses of addi14 tional staff to increase audits to not less than 

15 the minimum levels described in paragraph (2); 

16 and 

17 (B) for necessary expenses for tax enforce18 ment activities in order to determine and collect 

19 owed taxes, to conduct criminal investigations, 

20 and to enforce criminal statutes related to viola21 tions of internal revenue laws and other finan22 cial crimes. 

23 (2) AUDITING LEVELS.—The minimum levels 

24 described in this paragraph are as follows: 


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1 (A) Fifty percent of individuals or joint re2 turns with gross income of not less than 

3 $100,000,000. 

4 (B) Thirty-five percent of individuals or 

5 joint returns with gross income of not less than 

6 $10,000,000 and less than $100,000,000. 

7 (C) Twenty percent of individuals or joint 

8 returns with gross income of not less than 

9 $5,000,000 and less than $10,000,000. 

10 (D) Ten percent of individuals or joint re11 turns with gross income of not less than 

12 $1,000,000 and less than $5,000,000. 

13 (E) Ninety percent of corporations with 

14 gross income of not less than $20,000,000,000. 

15 (F) Fifty percent of corporations with 

16 gross income of more than $1,000,000,000 and 

17 less than $20,000,000,000. 

18 (b) IMPROVING TECHNOLOGY INFRASTRUCTURE.— 

19 There is appropriated for each of fiscal years 2022 

20 through 2031, for efforts collecting and protecting tax21 payer information, reducing tax-related theft and fraud, 

22 and modernizing the technology infrastructure of the In23 ternal Revenue Service— 


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1 (1) $3,800,000,000 for an additional amount 

2 for the ‘‘Department of the Treasury—Internal Rev3 enue Service—Operations Support’’ account; and 

4 (2) $500,000,000 for an additional amount for 

5 the ‘‘Department of the Treasury—Internal Revenue 

6 Service—Business Systems Modernization’’ account. 

7 (c) ENHANCING TAXPAYER SERVICES.—There is ap8 propriated $2,500,000,000 for an additional amount for 

9 the ‘‘Department of the Treasury—Internal Revenue 

10 Service—Taxpayer Services’’ account, for each of fiscal 

11 years 2022 through 2031, for the salaries and expenses 

12 of additional staff to achieve adequate staffing levels to 

13 provide taxpayer services, including pre-filing assistance 

14 and education as well as filing and account services. 

Æ 


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