Amnesty for Tax Evaders

Could tax amnesty be a tool for reducing the federal deficit? I think so.

The Internal Revenue Service has estimated that back taxes owed could reach $127 billion by 1992, and, as The Times recently noted, “All this money must be made up by honest taxpayers or borne in the form of added federal debt.”

One way to relieve that burden is to implement on the national scale a measure that has proven its value on the state level: a brief, one-time tax amnesty, allowing citizens to pay back taxes without penalty, followed by a beefing up of penalties, to encourage payment.

I have recently introduced a tax amnesty/tough enforcement package. The bill would institute a six-month amnesty period, to begin on the first of July after the bill is enacted. The amnesty period would cover all tax years through 1987 still subject to collection by the IRS. The legislation would include amnesty from criminal and civil penalties, and from 50% of any interest penalty owed. All federal taxes would be covered by the amnesty, not just the federal income tax.

The tough enforcement component of the package would increase all tax-related civil and criminal penalties by 50% after the end of the amnesty period. Additionally, the bill would authorize such funds as are necessary to add 3,000 additional revenue agents to the IRS.

This legislation can go a long way toward reducing our budget deficit. In 1983 the tax gap--that is, the difference between what is owed to the federal government and what is actually collected--was $24 billion. IRS Commissioner Goldberg, while appearing before the House Ways and Means Oversight Committee last year, testified that the tax gap is $87 billion. By 1992, lost revenue to the government could reach as high as $127 billion.

The results of state amnesty programs have been impressive. More than 130,000 delinquent taxpayers came forward in California; Illinois collected approximately $150 million, and more than $72 million was collected in Massachusetts. The success of these state tax amnesty programs has demonstrated the potential of this idea at the national level.

Tax amnesty would neither undermine Administration tax objectives nor the overall climate for voluntary compliance. As the state experience demonstrates, it will, in fact, add thousands of taxpayers to the rolls.

SEN. ALAN J. DIXON

D-Illinois