Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, April 20, 1990                   TAG: 9004200189
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A4   EDITION: METRO 
SOURCE: Cox News Service
DATELINE: WASHINGTON                                LENGTH: Medium

DOCTORS, LAWYERS CITED AMONG TOP TAX CHEATS

The panel's chairman, Rep. Jake Pickle, D-Texas, called for creation of a public committee representing a cross-section of America to help resolve the Internal Revenue Service's shortfall of at least $100 billion a year in federal taxes underreported by individuals and corporations.

IRS Commissioner Fred T. Goldberg Jr., testifying before the House Ways and Means oversight subcommittee, said he supported Pickle's call for establishment of a tax compliance round table, to be composed of government and industry experts and what Pickle called "some average folks."

The House subcommittee unveiled a long investigative report by the General Accounting Office showing that among self-employed sole proprietors in service industries - an IRS category that includes doctors, lawyers, barbers and accountants - the government failed to receive $2.86 billion in under-reported tax dollars in 1985.

"Doctors and lawyers were responsible for the most underreported of all tax dollars among the sole proprietors," Pickle said.

Based on the IRS' own information, doctors and lawyers were among those who held back an estimated 20 percent of the money that should have been paid in taxes that year.

"Do you realize that tax accountants are also in that category?" said Pickle. "That's alarming, isn't it?"

Pickle complained that every year since 1985, "the tax gap is steadily increasing." The tax gap, he said, is "the estimate of how much money the IRS thinks is owed the government, above that which has been reported and collected."

"In dollars, that's right. The tax gap has been growing," said Goldberg. "But that's not true in terms of percentages. The overall percentage of money underreported has not been rising."

Pickle argued, "What you're saying is contrary to what the public perceives and what members of Congress believe.

"People who are salaried employees, their federal taxes are raked off through payroll deductions," he said. "But others find ways to write off expenses - to take losses. I guess we're all guilty of that to some extent. But there has got to be more criminal prosecution."

"I don't want to start out here with a big hatchet and say we're going after everybody who's not paying his share of taxes. We can't turn our Internal Revenue Service into a Gestapo," Pickle said, referring to the secret police of Nazi Germany.

But the chairman criticized the IRS for not concentrating more heavily on auditing the returns of large corporations, where many billions of dollars are underreported annually, according to the General Accounting Office report.

"We need to do a better job of management as a whole," Goldberg agreed. "We've got to spend more time chasing the big guy."

Goldberg agreed that a combination of tax dodgers and taxpayers confused by complicated pages of IRS forms to be filled out is causing federal tax collection shortages of at least $100 billion a year.

But Goldberg said that "a dramatic growth in [tax] returns over the past 10 years and the increased need for policing the unwarranted use of tax shelters" had caused a large drain on IRS resources and manpower.

Goldberg said that "even if Congress grants steady annual increases in the [IRS] budget, so we can steadily step up our auditing activities of tax returns, it's going to take 10 years, until the year 2000, to regain the capabilities we had 10 years ago."