Government Accountability Office report addresses impact of sole proprietor noncompliant loss deductions on tax gap.
Ninety-five percent of all sole proprietors who reported losses in 2006 deducted some or all of their losses against other income, deducting a total of $40 billion, said the Government Accountability Office (GAO) in a report issued on Oct. 13. Approximately 5.4 million (or 25%) of all sole proprietors reported losses in 2006. The latest estimates for 2001, when the gross tax gap was some $345 billion, found “70% of the sole proprietor tax returns reporting losses had losses that were either fully or partially noncompliant,” GAO said. “About 53% of aggregate dollar losses reported in 2001 were noncompliant,” the report said, adding that “this noncompliance would correspond to billions of dollars of lost tax revenue.”
Source: Federal Tax Updates on RIA Checkpoint Newsstand 10/15/09
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