Idaho is losing $250 million a year in taxes due that simply haven't been paid, state Tax Commission Chairman Royce Chigbrow told JFAC this morning. "The tax gap is important, because it does impose an unfair burden on those who pay on time and accurately, it erodes public confidence in the voluntary tax system, and it reduces revenues needed for the state to provide services," Chigbrow said. That includes about $30 million of uncollected taxes on Internet sales that are owed under current law, but not paid.

Chigbrow said steps taken in the past year to address the tax gap are helping. JFAC approved $425,000 this year for temporary audit staff; the Tax Commission hired 31 temporary employees, who so far have collected $3.8 million, he said. Plus, the governor allocated $1.5 million from the budget stabilization fund on a one-time basis to pay for temporary employees, with the hope of collecting $10 million. So far, they've collected $5.87 million, Chigbrow said, and are on track to bring in "probably close to $12 million in tax revenue" by the end of the fiscal year.

At the same time, the tax gap is growing, he warned. There's been a 20 percent increase in "no-pay and partial pay returns," a 13 percent increase in taxpayers going on payment plans, and a 31 percent increase in bankruptcy. There's also been "a significant decrease in quarterly estimated payments, ... an increase in suspicious filings and an increase in non-filings. These are things that are increasing the need to follow up on the tax gap."

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