Fiscal Outlook: Addressing Improper Payments and the Tax Gap Would Improve the Government's Fiscal Position
GOVERNMENT ACCOUNTABILITY OFFICE WASHINGTON DC WASHINGTON DC United States
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The federal government continues to face an unsustainable long-term fiscal path. Changing this path will require difficult fiscal policy decisions to alter both long-term federal spending and revenue. In the near term, executive branch agencies and Congress can take action to improve the governments fiscal position by addressing two long-standing issues-improper payments and the tax gap. Over time, these issues involve amounts near or exceeding 1 trillion. Over the past decade, GAO has highlighted the issue of improper payments-defined by statute as payments that should not have been made or that were made in an incorrect amount including overpayments and underpayments. GAO has reported for several years that the federal government is unable to determine the full extent to which improper payments occur and reasonably assure that actions are taken to reduce them. The tax gap is the difference between taxes owed and those paid on time, as a result of taxpayers underreporting their tax liability, underpaying taxes, or not filing tax returns. Reducing the tax gap could provide additional revenue. This statement discusses 1 actions needed to address improper payments government-wide and 2 strategies to reduce the tax gap. It is based on GAOs recent work on improper payments, agency financial reports and inspectors general reports, and prior reports on the tax gap, including those with open recommendations or matters for congressional consideration that could potentially help reduce the tax gap.
- Government and Political Science