The U.S. Chamber is urging the government to exercise caution and restraint in its small business-focused campaign to collect more tax revenues. A recently formed coalition, co-chaired by the Chamber, is calling for more data on the causes of the tax gap and a refrain from one-size-fits-all solutions.

Members of the Coalition for Fairness in Tax Compliance (CFTC) recently testified before the Senate Budget Committee on the causes of the growing tax gap, which is the difference between what the federal government is owed in taxes and what is actually paid, as well as potential solutions for reducing it. The estimated tax gap is between $290 billion and $345 billion.

The complexity of the tax code makes it virtually impossible for even the most well-intentioned small business owner to comply, CFTC members testified. According to Nina Olson, the IRS' taxpayer advocate, IRS auditors found that an estimated 94% of noncompliance is the result of honest mistakes by filers who don't understand the 17,000-page tax code.

"We need targeted and sensible solutions that will not unfairly burden compliant small businesses," says Giovanni Coratolo, executive director of the Chamber's Council on Small Business.

At the top of CFTC's list of recommendations are nonenforcement solutions such as taxpayer education and simplification of the tax code. "We believe that every individual and business should pay their fair share of taxes, and the way to do this is to help taxpayers better understand the rules," Coratolo adds.

Last September, Commissioner Kevin Brown, the head of IRS' Small Business/Self-Employed Division, signaled that the division was planning a significant increase of audits to reduce the tax gap. Brown estimates that 75% of the tax gap can be traced to small business owners.