Tuesday, August 28, 2007

Sole proprietors blamed for portion of U.S. tax gap

Nearly two-thirds of U.S. sole proprietors underreported their net business income for the 2001 tax year, according to a recently released report by the General Accounting Office.

The report, "Tax Gap: A Strategy for Reducing the Gap Should Include Options for Addressing Sole Proprietor Ownership," says IRS data also indicate that sole proprietors misreported around 57% of their business income for that year.

The IRS estimates that $68 billion of the $345 billion gross tax gap for 2001 was due to sole proprietors.