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Tax Gap and Tax Simplification

NFIB believes that small business owners are over-taxed and that tax compliance is already too burdensome. In fact, the Small Business Administration found that the tax compliance burden is 67% higher for small businesses than large businesses. Annually small business owners spend between 1.7 and 1.8 billion hours and $18 to $19 billion complying with the tax code and tax paper is the largest single burden placed on small business at a cost of $74.24 an hour.

The tax gap refers to the difference between tax receipts owed to the federal government and what it actually collects. The projected lost revenue from the tax gap is nearly $300 billion. Proposals to close the tax gap focus on new reporting and paperwork requirements, as well as increasing audits. These proposals have a disproportionately harsh impact on small businesses and the NFIB is leading efforts to protect small business owners from more complicated tax rules.

Instead of making tax filing more complicated, the way to close the tax gap is by simplifying the tax code. Reducing the tax filing burden and clarifying complicated rules will mean fewer unintentional errors and less opportunity to cheat the system. NFIB will work with Congress and the Administration to pass proposals that will simplify the tax code and reduce your filing burden.

NFIB has joined forces with the The Coalition for Fairness in Tax Compliance and other small business organizations to fight for tax payer rights and monitor legislative actions taken by lawmakers to address the tax gap.

In particular, NFIB is concerned about the potential burden that the following proposals aimed at closing the tax gap could have on small businesses if they are passed into law: expanding information reporting on payments to corporations and requiring a certified taxpayer identification number from contractors.
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