Editorial: Pilot program seeks to trim tax gap

Published 12:00 am Thursday, June 5, 2014

The Oregon Department of Revenue thinks it can bring in $33 million in unpaid taxes by spending $3.8 million on the effort. That’s an impressive rate of return if it plays out as expected.

The Legislature last year approved the pilot program to try to narrow the gap, which includes hiring 31 added employees. But the so-called tax gap is much bigger, according to a report to legislators last week, estimated at $1.1 billion in personal tax revenue through 2010, plus another $70 million in corporate taxes.

More surprising, perhaps, was the assessment from state economists that a lot of the gap is inadvertent, making it critical to simplify the process of filing returns and paying taxes. They said most cases fall in one of three categories: filing on time, reporting deductions and income accurately and actually paying what is owed.

Making accurate estimates of the tax gap is also extremely difficult, the report indicated, making difficult any comparison to other states, many of which as similarly attempting to strengthen their collections.

The Department of Revenue is scheduled to report to lawmakers in 2015 about the status of the gap and ideas for future steps. A pilot program is a good approach to seeking solutions to this age-old problem, testing some methods and determining which ones are effective before investing further.

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