Tax Compliance Statistics
Last updated: 2026-10-28 · 12 sourced statistics
Most tax is paid on time and in full, and the part that is not is concentrated where nobody else reports the income. The IRS projects a gross US tax gap of $696 billion for tax year 2022, a voluntary compliance rate of 85.0%, with underreporting on filed returns making up about 77% of the gap. Its research shows why: wages subject to withholding are misreported at about 1%, while income with little or no information reporting, such as sole proprietor income, is misreported at 55%. In the UK, HMRC estimates a tax gap of 6.4% for 2024 to 2025, with small businesses accounting for 62% of it. For anyone who invoices, the practical point is that business income is the least visible income to tax authorities, so complete invoice records are what make it reportable. Every figure below links to the publication that states it.
Key takeaways
- The IRS projects a $696 billion gross tax gap for tax year 2022, falling to a $606 billion net gap after $90 billion of enforced and other late payments.
- About 85.0% of US federal tax owed for tax year 2022 is projected to be paid voluntarily and on time, rising to 86.9% after enforcement and late payments.
- Information reporting drives compliance: 1% misreporting where income has withholding and third-party reporting, 55% where there is little or none, such as nonfarm sole proprietor income.
- Small businesses account for 62% of the UK's 6.4% tax gap in 2024 to 2025, according to HMRC.
- From payments made after 31 December 2025, the US Form 1099-NEC reporting threshold for contractor payments rose from $600 to $2,000.
At a glance.
Every figure on this page in one table, each linked to its named source. Scroll down for the full context behind each number.
| Figure | What it measures | Source | Year |
|---|---|---|---|
| $696B | The IRS projects the annual gross US federal tax gap for tax year 2022 at $696 billion, slightly lower than its revised tax year 2021 projection. | Internal Revenue Service, Publication 5869: Tax Gap Projections for Tax Year 2022 (October 2024) | 2024 |
| 85.0% | The projected voluntary compliance rate for tax year 2022 is 85.0%, and the net compliance rate after enforced and other late payments is 86.9%. | Internal Revenue Service, Publication 5869: Tax Gap Projections for Tax Year 2022 (October 2024) | 2024 |
| $539B | Underreporting of tax on timely filed returns accounts for $539 billion of the tax year 2022 gross tax gap, approximately 77%; underpayment adds $94 billion and nonfiling $63 billion. | Internal Revenue Service, Publication 5869: Tax Gap Projections for Tax Year 2022 (October 2024) | 2024 |
| $606B | Enforced and other late payments are projected to recover $90 billion, leaving a net tax gap of $606 billion for tax year 2022. | Internal Revenue Service, The tax gap | 2024 |
| 55% | Income subject to substantial information reporting and withholding is misreported at 1%, income with substantial information reporting but no withholding at 6%, and income with little or no information reporting, such as nonfarm sole proprietor income, at 55% (tax year 2014 to 2016 estimates). | Internal Revenue Service, Publication 5869: Tax Gap Projections for Tax Year 2022, citing the tax year 2014 to 2016 estimates | 2024 |
| $5.3T | The IRS collected more than $5.3 trillion in revenue in fiscal year 2025 and processed more than 271.4 million tax returns and other forms, including almost 162.8 million individual income tax returns. | Internal Revenue Service, Publication 55-B: IRS Data Book, Fiscal Year 2025 | 2025 |
| 93.7% | In fiscal year 2025, 82.6% of all returns and other forms, and 93.7% of individual income tax returns, were filed electronically. | Internal Revenue Service, Publication 55-B: IRS Data Book, Fiscal Year 2025 | 2025 |
| 497,621 | The IRS closed 497,621 tax return audits in fiscal year 2025, resulting in $26.8 billion in recommended additional tax; 81.0% of audits were conducted by correspondence rather than in the field. | Internal Revenue Service, Publication 55-B: IRS Data Book, Fiscal Year 2025 | 2025 |
| 6.4% | HMRC's provisional estimate of the UK tax gap for 2024 to 2025 is 6.4% of total theoretical tax liabilities, or £59.2 billion, down from 7.5% in 2005 to 2006. | HM Revenue and Customs, Measuring tax gaps 2026 edition: tax gap estimates for 2024 to 2025 | 2026 |
| 62% | Small businesses accounted for 62% of the UK tax gap in 2024 to 2025, up from 58% in 2020 to 2021. | HM Revenue and Customs, Measuring tax gaps 2026 edition: tax gap estimates for 2024 to 2025 | 2026 |
| EUR 2.7T | Outstanding tax arrears at fiscal year-end across the administrations surveyed by the OECD total about EUR 2.7 trillion, of which around EUR 990 billion is collectable; the average ratio of year-end arrears to net revenue was 29.3% in 2023, or 11.5% excluding a few jurisdictions above 50%. | OECD, Tax Administration 2025: Comparative Information on OECD and other Advanced and Emerging Economies, chapter 7 (Collection) | 2025 |
| $2,000 | Businesses must report payments to non-employees for services on Form 1099-NEC when they total $600 or more in a calendar year, or $2,000 or more for payments made after 31 December 2025. | Internal Revenue Service, Form 1099-NEC and independent contractors (FAQ) | 2026 |
The statistics
The IRS projects the annual gross US federal tax gap for tax year 2022 at $696 billion, slightly lower than its revised tax year 2021 projection.
Source:Internal Revenue Service, Publication 5869: Tax Gap Projections for Tax Year 2022 (October 2024)2024
The projected voluntary compliance rate for tax year 2022 is 85.0%, and the net compliance rate after enforced and other late payments is 86.9%.
Source:Internal Revenue Service, Publication 5869: Tax Gap Projections for Tax Year 2022 (October 2024)2024
Underreporting of tax on timely filed returns accounts for $539 billion of the tax year 2022 gross tax gap, approximately 77%; underpayment adds $94 billion and nonfiling $63 billion.
Source:Internal Revenue Service, Publication 5869: Tax Gap Projections for Tax Year 2022 (October 2024)2024
Enforced and other late payments are projected to recover $90 billion, leaving a net tax gap of $606 billion for tax year 2022.
Source:Internal Revenue Service, The tax gap2024
Income subject to substantial information reporting and withholding is misreported at 1%, income with substantial information reporting but no withholding at 6%, and income with little or no information reporting, such as nonfarm sole proprietor income, at 55% (tax year 2014 to 2016 estimates).
The IRS collected more than $5.3 trillion in revenue in fiscal year 2025 and processed more than 271.4 million tax returns and other forms, including almost 162.8 million individual income tax returns.
Source:Internal Revenue Service, Publication 55-B: IRS Data Book, Fiscal Year 20252025
In fiscal year 2025, 82.6% of all returns and other forms, and 93.7% of individual income tax returns, were filed electronically.
Source:Internal Revenue Service, Publication 55-B: IRS Data Book, Fiscal Year 20252025
The IRS closed 497,621 tax return audits in fiscal year 2025, resulting in $26.8 billion in recommended additional tax; 81.0% of audits were conducted by correspondence rather than in the field.
Source:Internal Revenue Service, Publication 55-B: IRS Data Book, Fiscal Year 20252025
HMRC's provisional estimate of the UK tax gap for 2024 to 2025 is 6.4% of total theoretical tax liabilities, or £59.2 billion, down from 7.5% in 2005 to 2006.
Source:HM Revenue and Customs, Measuring tax gaps 2026 edition: tax gap estimates for 2024 to 20252026
Small businesses accounted for 62% of the UK tax gap in 2024 to 2025, up from 58% in 2020 to 2021.
Source:HM Revenue and Customs, Measuring tax gaps 2026 edition: tax gap estimates for 2024 to 20252026
Outstanding tax arrears at fiscal year-end across the administrations surveyed by the OECD total about EUR 2.7 trillion, of which around EUR 990 billion is collectable; the average ratio of year-end arrears to net revenue was 29.3% in 2023, or 11.5% excluding a few jurisdictions above 50%.
Businesses must report payments to non-employees for services on Form 1099-NEC when they total $600 or more in a calendar year, or $2,000 or more for payments made after 31 December 2025.
Source:Internal Revenue Service, Form 1099-NEC and independent contractors (FAQ)2026
When these numbers don't apply
Aggregate statistics hide a lot. Read these caveats before quoting a figure as if it describes your specific situation.
- The IRS figures for tax year 2022 are projections, not measured results. They are built from the tax year 2014 to 2016 estimates, which rely on audits that take years to complete, and the IRS lists its next estimates as delayed. The 1%, 6% and 55% misreporting rates come from those older estimates.
- Tax gaps measure different things in different countries. The IRS gap covers federal taxes only (individual and corporation income, employment, estate and excise tax), while HMRC's gap covers all UK taxes it administers. Do not add or directly compare the dollar and pound figures.
- HMRC's 2023 to 2024 and 2024 to 2025 estimates are provisional projections because of data lags, and HMRC classes a larger share of its estimate as high uncertainty in the 2026 edition, mainly because of small business Corporation Tax.
- IRS Data Book figures describe what the IRS did in fiscal year 2025 (October 2024 to September 2025): returns processed, audits closed and recommended tax. Recommended additional tax is not the same as tax collected.
- OECD tax debt figures compare administrations with very different systems; the OECD itself warns that a few jurisdictions with arrears above 50% of net revenue pull the average up.
- This page is general information about compliance statistics, not tax advice. Filing thresholds and deadlines depend on your situation; check with the tax authority or an adviser.
How we compiled this data
Reviewed on 2026-10-28. Every figure was re-read in the primary publication on the review date: IRS Publication 5869 (Tax Gap Projections for Tax Year 2022, October 2024) and the IRS tax gap page (updated April 2026, which lists new estimates as delayed); IRS Publication 55-B, the Data Book for fiscal year 2025 (released June 2026); HMRC's Measuring tax gaps 2026 edition (published 23 June 2026); OECD Tax Administration 2025 (November 2025, 2023 data; read via an Internet Archive copy because the OECD site blocks automated access); and the IRS Form 1099-NEC FAQ. We removed the previous page's rounded '~$700B' and '~85%' figures in favour of the exact projections, dropped a 'number one driver' label that was not a figure, corrected the out-of-date $600 Form 1099-NEC threshold, and moved the EU VAT gap to the VAT statistics page.
We hand-collected each figure from its original publisher rather than recycling secondary round-ups, cross-checked the headline numbers against the source documents in 2026-10-28, and link every statistic to the report it came from so you can verify it yourself. Where a publisher issues annual updates, we cite the report edition and flag the year inline.
Frequently asked questions
What is the US tax gap?
It is the difference between the federal tax owed and the tax paid voluntarily and on time. The IRS projects a gross tax gap of $696 billion for tax year 2022. After $90 billion of enforced and other late payments, the projected net tax gap is $606 billion.
What is the IRS voluntary compliance rate?
The share of true tax liability paid voluntarily and on time. For tax year 2022 the IRS projects 85.0%, and a net compliance rate of 86.9% once enforcement and late payments are counted.
Why is self-employment income misreported more often?
Because nobody else reports it. The IRS finds misreporting of 1% for income with withholding and substantial information reporting, such as wages, but 55% for income with little or no information reporting, such as nonfarm sole proprietor income. Invoices and payment records are often the only trail for that income.
How big is the UK tax gap?
HMRC's provisional estimate for 2024 to 2025 is 6.4% of theoretical tax liabilities, or £59.2 billion. Small businesses account for 62% of it, the largest customer group.
How many tax returns does the IRS audit?
In fiscal year 2025 the IRS closed 497,621 tax return audits, out of more than 271.4 million returns and other forms processed, with $26.8 billion in recommended additional tax. Most audits, 81.0%, were done by correspondence.
When do I need to file a Form 1099-NEC?
When a business pays a non-employee $600 or more for services in a calendar year, or $2,000 or more for payments made after 31 December 2025. Check the current IRS instructions for your situation; this is general information, not tax advice.
Put these figures to use
- Invoice tax compliance by country: What invoices must show for VAT, GST and sales tax in the US, UK, EU and other countries.
- Quarterly tax payments for freelancers: IRS estimated tax due dates, safe harbors and a worked example, plus UK payments on account.
- Year-end tax planning checklist: Which tax moves must happen by December 31, including Form 1099-NEC at the $2,000 threshold.
- Taxes hub: Guides on sales tax, VAT and tax on invoices.
Related statistics
Stop becoming a late-payment statistic
Create invoices, send them and record payments in InvoiceQuickly. Free to start.
Try InvoiceQuickly Free