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Can the United States government significantly reduce the federal tax gap? This question has attracted a great deal of scholarly attention over the years and has been the focus of numerous government reports. The "tax gap" is the official term for the Treasury Department's estimate of the difference between what American taxpayers should pay to the federal government in a given tax year (that is, the amount of tax they owe, based on a reasonable interpretation of existing tax laws as applied to particular taxpayers' circumstances) and what they actually pay. This estimate is derived from painstaking and detailed audits of randomly selected returns and it is the best overall benchmark of taxpayer noncompliance we have. According to the most recent numbers (from the 2001 tax year), the annual U.S. tax gap is around $290 billion. This represents a noncompliance rate of roughly 15%. It is fair to say, then, that U.S. taxpayers o n average remit 15% less in tax to the government than they actually owe.