The Internal Revenue Service's (IRS) Taxpayer Compliance Measurement Program plays an important role in tax policy and administration decisions. IRS uses the data for measuring compliance levels, estimating the tax gap (the difference between the amount of income tax owed and the amount voluntarily paid), identifying compliance issues, developing formulas for objectively selecting returns to audit, and allocating audit resources. Congress as well as federal and state agencies use the program's data for policy analysis, revenue estimating, and research. This report discusses the status of IRS' plans for carrying out the program in tax year 1994. It also identifies the potential effects of these plans on measuring taxpayer compliance.

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