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Illustration: Annelise Capossela/Axios

The Treasury Department on Thursday unveiled new tax compliance measures that it estimates will raise an additional $700 billion in tax revenue over the next decade, before raising $1.6 trillion in the second decade.

Why it matters: The initiatives are part of President Biden’s American Families Plan agenda and they aim to close the “tax gap” between what the government is owed and what is actually paid.

  • Treasury analysis puts that gap at $600 billion in 2019 and suggests it will balloon to roughly $7 trillion through the next 10 years.

The new IRS compliance agenda includes:

  • Investing nearly $80 billion in additional IRS resources over the next decade to focus on things like modernizing technology, improving data analytics, and hiring and training agents dedicated to complex enforcement.
  • Improving IRS access to third-party reports, including those from financial institutions that could help uncover unreported income streams — helping to deter tax evaders.
  • Building a technological infrastructure designed to focus on developing machine learning capabilities, providing protection against cyberattacks, and improving external communication with taxpayers.
  • More oversight and stepped-up penalties for evaders — or those who help them, like unregulated tax preparers who may not be providing accurate guidance to their clients.

The $700 billion figure is on the conservative side, Treasury officials said. The impact of deterrence could help nudge the figure higher.

Eye-popping stat: The IRS has the oldest technological infrastructure in the U.S. government. It uses a programming language called Cobol, which is no longer taught and expensive to maintain.

  • "The lack of a modernized technological infrastructure means that the IRS doesn't have the tools it needs to effectively meet the challenges of the day," an official said.

Of note: The IRS' plan to use third-party reports from financial institutions as a reference for audits will focus on individuals making more than $400,000 per year, officials said.

The bottom line: The Biden administration is under pressure to find ways to pay for its ambitious American Families Plan and American Jobs Plan. This is one piece of that puzzle.

Go deeper

Updated Aug 9, 2021 - Politics & Policy

Senate Democrats release $3.5 trillion budget resolution

Senate Majority Leader Chuck Schumer (right) and Budget Committee Chair Bernie Sanders. Photo: Samuel Corum/Getty Images

Senate Majority Leader Chuck Schumer on Monday released the full text of Democrats' $3.5 trillion budget resolution, which the Senate is expected to pass without any Republican votes as early as this week.

Why it matters: Passing the resolution is the first significant step to enacting Democrats' plans to overhaul the country's climate, child care and health care laws through the budget reconciliation process.

Biden rejects Trump's latest executive privilege claims

Photo: Jim Watson and Saul Loeb/AFP via Getty Images

The White House on Monday rejected two more of former President Trump's claims of executive privilege over documents that the House select committee investigating the Jan. 6 Capitol riot requested, CNN first reported.

Why it matters: Trump's legal team is seeking to block some of the panel's requests for records by invoking executive privilege, which can allow presidents and their aides to sidestep congressional scrutiny. The Biden administration has maintained that it will evaluate on a case-by-case basis.

Amazon warehouse workers in New York file petition to hold unionization vote

Amazon workers and their supporters rally outside the National Labor Relations Board's regional office in Brooklyn, New York City, after filing a petition requesting an election to form a union. Photo: Gabby Jones/Bloomberg via Getty Images

Amazon warehouse workers in New York City filed a petition on Monday with the National Labor Relations Board (NLRB) to hold a vote on unionization.

Why it matters: The move comes six months after an organizing effort was defeated at Amazon's distribution center in Alabama.

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