Question

The “tax gap” is the difference between the amount of tax the government actually collects and...

The “tax gap” is the difference between the amount of tax the government actually collects and the amount they could have collected if all of the tax rules had been complied with.

Group of answer choices

True

False

Homework Answers

Answer #1

Answer is true

Tax gap is the gap which arises due to amount of reported income and taxes paid on it. If all of the income was reported the govenment would have collected a different tax and actual tax collected depends on the reported income. Hence the difference between the amount of tax that government actually collects and the amount they could have collected if all of the tax rules had been complied with is tax gap. Hence tax gaps is there as long as tax rules are not fully compled with.

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