Each year the IRS conducts a survey to determine the amount of unpaid taxes. The "tax gap" is defined as the amount of taxes that are owed by taxpayers but not paid on time.

For the year 2006, revised figures released this week showed that the tax gap increased. The previous estimate of the 2006 tax gap was $345 billion but it increased to $450 billion.

The "net tax gap" is a smaller number that reflects the ability of the IRS to collect some of the unpaid taxes. When the additional $65 billion in taxes collected later is subtracted from the $450 billion, the net tax gap is $385 billion. The net tax gap number increased from $290 billion in 2001 to the larger number by 2006.

The compliance level for taxpayers remains 83.7%. This indicates that the majority of Americans are continuing to calculate and pay their taxes correctly.

Sen. Max Baucus (D-MT) is Chairman of the Senate Finance Committee. He responded to the IRS survey by noting, "This report shows that closing the tax gap needs to be a major focus of tax reform. An improved tax code that's simple and fair to all Americans will help close the tax gap, boost our economy and create jobs."

Editor's Note: Both Sen. Baucus and House Ways and Means Committee Chair Dave Camp (R-MI) have been conducting hearings that will lead to major tax reform in 2013. For the vast majority of Americans who pay their fair share of taxes, it is beneficial if Baucus and Camp are able to simplify the tax system and reduce the tax gap. More effective collection of revenue decreases the need to raise taxes on those who are currently paying their fair share.