The IRS hopes to improve the tax gap (ie, the difference between what taxpayers should have paid and what they actually paid) by launching the new National Research Program (NPR). The NPR study is the first in an ongoing series of multiyear evaluations that will enable the IRS to make updates to compliance estimates.
The NPR will use updated selection tools and will begin by choosing approximately 13,000 random 2006 individual tax returns. Tax payers selected for the NPR will receive official letters of selection, with the majority having their returns confirmed via in-person audits by an IRS examiner. Those returns that can be verified through third parties will most likely not be subjected to an inperson review. The IRS also plans on doing compliance research for S corporations that will include 5000 returns filed for 2003 and 2004.