Homage to information returns.

(75) But see Allen Kenney, Deja Vu? Bush Wants $500 Million for IRS to Toughen Up in 2006, 106 TAX NOTES 747 (Feb. 14, 2005) ("Bush's 2005 budget proposal slashed modernization funding by more than a fourth, down to $285 million from 2004's $390 million allocation. Congress was even less kind, decreasing modernization funding nearly 50%, from $388 million for 2004 to $203 million for this year.").

(76) See generally Dan Mitchell, Tax Reform: The Key to Preserving Privacy and Competition in a Global Economy 9 (Inst. for Policy Innovation, IPI Policy Report No. 171, 2002) ("Fundamental tax reform is the solution to an invasive tax code that gives government the right to know every detail about a taxpayer's financial existence.").

(77) See, e.g., Stephen Moore, The Economic & Civil Liberties Case for a National Sales Tax, 71 TAX NOTES 101, 103-04 (1996) (arguing that a retail sales tax, and not a flat tax, would cause our tax system to be less intrusive as the Service has the right to search the property and financial documents of American citizens without a search warrant).

(78) See, e.g., PRIVACY PROTECTION STUDY COMM'N, REPORT OF THE PRIVACY PROTECTION STUDY, THE CITIZEN AS TAXPAYER app. 2, at 6 (1977). The report states:

[T]o fulfill the requirements of the Internal Revenue Code, the

Internal Revenue Service collects and maintains vast amounts of

information about all individual taxpayers. Congress has determined

that the compelling societal need to finance government activities

warrants the intrusion into the lives of individuals that compliance

with the Internal Revenue Code inevitably entails.

Id.; see also Cynthia Blum, The Flat Tax: A Panacea for Privacy Concerns?, 54 AM. U. L. REV. 1241, 1281 (2005) ("[T]he manner in which the IRS generally obtains information about investment income (Form 1040 or Form 1099) is not particularly intrusive.").

(79) See generally John J. Thorndike, Wall Street, Washington, and the Business of Information Reporting, 110 TAX NOTES 787 (Feb. 13, 2006) (reviewing the history of information reporting and the industry's reluctance to undertake such reporting responsibilities).

(80) See, e.g., A Closer Look at the Size and Sources of the Tax Gap: Hearing Before the U.S. S. Comm. on Finance Subcomm. on Taxation and IRS Oversight, 109th Cong. 28 (2006) (statement of the Honorable J. Russell George, Treasury Inspector General for Tax Administration), reprinted in J. Russell George, TIGTA Says More Resources Are Needed to Close the Tax Gap, 2006 TNT 144-52 (July 27, 2006) ("Strategies have been identified to decrease the tax gap and improvements can be realized; however, sufficient resources are needed to ensure compliance with the tax laws.").

(81) Senate Fin. Comm., Finance Approves Use of Tax Code to Crack Down on Sex Trafficking, 2006 TNT 125-25 (June 29, 2006).

(82) In fiscal year 2000, the overall audit rate for individuals was at a historic low of 49%. Internal Revenue Serv., Statement by IRS Commissioner Charles O. Rossotti on Audit and Collection Activity for Fiscal 2000, 2001 TNT 33-11 (Feb. 15, 2001). The rate continues to be fairly low. See INTERNAL REVENUE SERV., DATA BOOK 2005, PUBL'N 55B (2006), available at http://www.irs.gov/pub/irs-soi/05databk.pdf (indicating that 67% of individual income tax returns filed during fiscal year 2005 were examined). But see Mark W. Everson, Everson Touts Improved Enforcement Statistics, 2006 TNT 224-18 (Nov. 21, 2006) (noting that compliance efforts have increased over the last several years, resulting in a larger percentage of audited returns).

(83) See generally Lederman, supra note 66.

(84) See, e.g., Tax Gap Testimony, supra note 1 ("Simplifying the tax code or fundamental tax reform has the potential to reduce the tax gap by billions of dollars."); Wesley Elmore, Rangel Says Tax Simplification Would Lead to "Trillions of Dollars" in Savings, 2006 TNT 224-2 (Nov. 21, 2006). Yet, deciding how Congress should simplify the Code is fraught with challenges. See, e.g., STAFF OF THE JOINT COMM. ON TAXATION, 107TH CONG., STUDY OF THE OVERALL STATE OF THE FEDERAL TAX SYSTEM AND RECOMMENDATIONS FOR SIMPLIFICATION, PURSUANT TO 8022(3)(B) OF THE INTERNAL REVENUE CODE OF 1986 (Comm. Print 2001) (detailing all the sources of the Code's complexity); THE PRESIDENT'S ADVISORY PANEL ON FED. TAX REFORM, SIMPLE, FAIR, AND PRO-GROWTH: PROPOSALS TO FIX AMERICA'S TAX SYSTEM (Nov. 2005) (offering different approaches to simplify the tax system); William G. Gale & Janet Holtzblatt, The Role of Administrative Issues in Tax Reform: Simplicity, Compliance, and Administration, in UNITED STATES TAX REFORM IN THE 21ST CENTURY 179, 206-07 (George R. Zodrow & Peter Mieskowski eds., 2002) (noting that determination of the number of a taxpayer's qualified dependents would be just as difficult under the flat tax as under the income tax); Deborah L. Paul, The Sources of Tax Complexity: How Much Simplicity Can Fundamental Tax Reform Achieve?, 76 N.C. L. REV. 151, 155 (1997) (noting that the desire for equitable distribution of tax liabilities has resulted in tax system complexity).

(85) See, e.g., I.R.S. Notice 2000-44, 2000-2 C.B. 255 (warning taxpayers not to use grantor trusts as a vehicle to camouflage their tax shelter losses lest they risk the imposition of possible criminal penalties).

(86) See, e.g., Michael J. Graetz, 100 Million Unnecessary Returns: A Fresh Start for the U.S. Tax System, 112 YALE L.J. 261 (2002) (advocating the use of a blended consumption and income tax regime); Deborah H. Schenk, Simplification for Individual Taxpayers: Problems and Proposals, 45 TAX L. REV. 121 (1989) (offering numerous proposals to simplify the existing income tax system).

(87) See NATIONAL TAXPAYER ADVOCATE REPORT, supra note 50, at 381 (identifying unreported cash income as likely the largest single component of the tax gap).

(88) Id.

(89) See supra note 1.

(90) Compania de Tabacos v. Collector, 275 U.S. 87, 100 (1927) (Holmes, J., dissenting).