User fees are fees, charges, and assessments that the federal government levies on the public for specific goods, services, or benefits. The principle behind user fees is that the costs of certain government services should be borne by the individuals or businesses who directly benefit from them, rather than by the general taxpayer.
Examples of user fees include entrance fees at national parks, patent application fees, and fees for customs inspections. The authority to charge user fees is typically granted by Congress in legislation. The Office of Management and Budget (OMB) provides guidance to federal agencies on how to set and manage user fees, and the revenue collected is often dedicated to funding the specific activity for which the fee is charged.
Tax avoidance and tax evasion both involve reducing a tax bill, but one is legal and the other is illegal. “Tax avoidance” is the legal use of the tax code to reduce the amount of tax that is owed. This involves legitimately taking advantage of deductions, credits, and other provisions that were intentionally placed in the tax law by Congress to encourage certain behaviors, such as saving for retirement or investing in a business.
“Tax evasion,” on the other hand, is the illegal act of not paying taxes that are legally owed. This involves intentionally misrepresenting or concealing income, overstating deductions, or failing to file a tax return at all. Tax evasion is a crime and can result in significant financial penalties and even imprisonment.
The “Tax Gap” is the difference between the total amount of taxes legally owed to the government and the amount that is actually paid on time. This gap arises from several sources, including underreporting of income, underpayment of taxes, and failure to file a tax return altogether. Reducing the tax gap is a key goal for the IRS to ensure fairness in the tax system.
The IRS periodically conducts research and publishes estimates of the size and sources of the tax gap. These detailed reports provide the best available data on tax compliance. You can find these tax gap studies on the IRS website. The analysis helps policymakers and the public understand the scale of tax noncompliance and informs strategies for improving tax enforcement and administration.
Detailed data on Federal tax receipts is available from several official government sources. For the most up-to-date information, the U.S. Department of the Treasury publishes daily and monthly Treasury statements that provide a running tally of government revenues, broken down by source.
For more comprehensive analysis and historical data, the Congressional Budget Office (CBO) publishes regular reports on federal revenues as part of its Budget and Economic Outlook. Additionally, the Office of Management and Budget (OMB) includes detailed historical tables on tax receipts in the President’s annual Budget Request. Finally, the Internal Revenue Service (IRS) provides extensive statistics on tax collections based on filed tax returns.
The Internal Revenue Service (IRS) provides extensive data on its audit and enforcement activities in its annual “IRS Data Book.” This publication is the official source for statistics on the operations of the IRS and includes detailed information on the number of tax returns filed, the number of audits conducted, and the results of those audits.
The Data Book breaks down audit rates by different types of taxpayers, such as individuals and corporations, and by income levels. It also includes data on collection activities, civil penalties, and criminal investigations. The Government Accountability Office (GAO) and the Treasury Inspector General for Tax Administration (TIGTA) also periodically publish reports that analyze IRS enforcement trends and effectiveness.
The U.S. government gets its money from several different sources to fund public services. The single largest source of revenue is the individual Income tax, which is the tax people pay on their wages, salaries, and other income.
The second largest source is Payroll taxes, which are dedicated taxes on earnings that fund Social Security and Medicare. The third main source is the Corporate Income tax, which is the tax that businesses pay on their profits. Other, smaller sources of revenue include excise taxes (on items like gasoline and tobacco), customs duties, and earnings from the Federal Reserve.
