Trump Admin Withholds “Tax Gap” Data, Masking Cost of IRS Cuts

Oct 7

NEWS & RESEARCH

For decades, the Internal Revenue Service (IRS) has published estimates of the tax gap, the amount of tax owed under existing law that goes uncollected each year. The agency once released the figure every few years, but during the Biden administration it began providing annual updates in response to requests from lawmakers of both parties. Under President Trump, however, the agency has yet to release one. The most recent projection, published in October 2024, estimated that roughly $700 billion in owed taxes went uncollected in 2022, enough to cover the cost of the Medicaid program. The next estimate, covering 2023, was scheduled for release in the fall of 2025, but nearly a year later the IRS still says its release is delayed, and the head of the agency, Frank Bisignano, has publicly questioned the utility of the measure. Because the delayed report covers 2023, it would not yet reflect any changes since Trump returned to office, but without it, there is no current baseline for measuring whether more taxes are now going unpaid, which makes it difficult for policymakers to judge how tax-law and staffing changes affect compliance and collections.

SOURCES: New York Times | Tax Policy Center

ANALYSIS & OPINION

During Trump's second term, the administration has significantly reduced the IRS’s budget and pushed out roughly a quarter of its workforce. With such reduced resources, the agency is notably less able to conduct audits and collect taxes. In fact, revenue collected from audits dropped by more than a third in fiscal year 2025, and critics worry that hiding such unflattering information is precisely why the administration has held up the annual tax gap estimate. As Natasha Sarin, a former Treasury official, put it, "Without a metric of the tax gap that is telling us in real time about trends in compliance and how they're changing, I worry that it's hard for policymakers to see the full swath of the damage that's been done by the gutting of the agency. And, in fact, I worry that's the point." Moreover, the delay conveniently protects the rich, as most of the tax gap comes from filers who do not report all of their income to the IRS, particularly income like business profits that no third party verifies. Beyond the tax gap itself, though, this latest move reveals a worrisome pattern of a lack of transparency across the Trump administration. For example, the Pentagon declined to provide information to the nonpartisan Congressional Budget Office about the cost of the war in Iran, and in 2025, Trump fired the head of the Bureau of Labor Statistics (BLS), which produces the monthly jobs numbers, baselessly calling the labor market data "rigged." Yet, public data is how Congress, researchers and voters hold the government accountable, and without it, they cannot measure the consequences of the administration's policies.

SOURCES: New York Times | Tax Policy Center

HOW TO FIX IT

Federal action:

Reintroduce and pass the Restoring the IRS Act, which would require the IRS by law to report to Congress on the tax gap within a year of enactment and every year after that.

Congress could strengthen the bill by setting a public release date, requiring the IRS to keep reporting under its existing methodology, and directing the Joint Committee on Taxation, a nonpartisan office that answers to Congress and not the president, to produce the estimate using data the IRS would be required to share if the agency misses its deadline.

Use the annual appropriations process to withhold funding for the IRS's leadership offices until the tax gap estimate is published. Unlike a reporting requirement alone, a funding condition takes effect automatically if the agency misses its deadline.

Urge members of Congress to ask the Government Accountability Office and the Treasury Inspector General for Tax Administration to investigate why the estimate has been withheld and whether the underlying audit data is still being collected.

Pass the Stop CHEATERS Act, which would restore more than $83 billion in IRS funding through fiscal year 2031, most of it to rebuild enforcement against wealthy individuals and large corporations. It would also require the IRS to report to Congress every two years on how much unpaid tax is owed at each income level.
Pass the Statistical Agency Integrity and Independence Act, which would protect the heads of four major statistical agencies, including the BLS, from being fired over the data they publish, and would require those agencies to release data on a pre-announced schedule that can be changed only for technical reasons. This would help address the broader pattern of lack of transparency in the Trump administration, and Congress should also extend those protections to the IRS's statistical work, so the tax gap estimate could not be delayed for political reasons.

State action:

Measure state tax gaps. Pew reported in April 2026 that few states study their own tax gaps. A state estimate would fill some of the hole if federal reporting lapses.

Litigation:

Support AFGE v. Trump, a lawsuit brought by federal employee unions and cities arguing that the president cannot carry out mass federal layoffs without authorization from Congress. Those layoffs have cost the IRS auditors it needs to collect unpaid taxes, which widens the tax gap. The case’s outcome will not be a direct fix, though, because although a win could block further layoffs and help preserve the agency's remaining enforcement staff, it would not restore the agency's funding or require the IRS to report on the tax gap.
Support Freedom of Information Act (FOIA) requests, and lawsuits if they are denied, seeking the completed 2023 tax gap estimate and the data behind it.

Legislation: S. 1788 - Restoring the IRS Act | S. 4298 - Stop CHEATERS Act | H.R. 4907 - Statistical Agency Integrity and Independence Act