Improving Sole Proprietors' Compliance
Sole proprietors—that is, individuals who operate a business and report its income and expenses on Schedule C of the individual income-tax form (Form 1040)—have a high noncompliance rate. IRS estimated that $68 billion of the $345 billion annual tax gap in 2001 was due to sole proprietors' noncompliance. In 2007, GAO offered a number of options for improving sole proprietors' compliance and recommended that the Secretary of the Treasury
- ensure that the department's tax-gap strategy include (1) a segment on improving sole proprietor compliance that is coordinated with broader tax-gap reduction efforts, and (2) specific proposals, such as the options GAO identified, that constitute an integrated package.
Treasury neither agreed nor disagreed with the recommendation and said that its tax-gap strategy was intended to apply broadly to all taxpayers.
^ Back to topKey Reports
- Tax Gap: A Strategy for Reducing the Gap Should Include Options for Addressing Sole Proprietor Noncompliance
- GAO-07-1014, July 13, 2007
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 75 pages) Accessible Text Recommendations (HTML)
