This report presents estimates of the tax gap for the tax year (TY) 2011–2013 timeframe. The tax gap and associated concepts are a particular way of defining and analyzing compliance and noncompliance. The word “tax” in the phrase ‘tax gap’ is used broadly to encompass both tax and refundable and non-refundable tax credits.
Estimating the tax gap is inherently challenging and requires assessing the merits of alternative methods, assumptions, and data sources. There is no single approach that can be used for estimating all the components of the tax gap, so multiple methods are used. Each approach is subject to non-sampling error; the component estimates that are based on samples are further subject to sampling error.
The net compliance rate (NCR) is a ratio measure corresponding to the net tax gap. The estimated NCR is 85.8 percent. The voluntary compliance rate (VCR) corresponds to the gross tax gap; the estimated VCR is 83.6 percent.
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