IRS Commissioner Mark Everson said there is a tax gap of $225 billion from people not filing, underreporting and not paying enough to the U.S. government.

In recent years, the IRS has worked to improve its customer service. The agency reduced busy signals to taxpayers who were calling for help and made it easier to file taxes online. But investigations and audits declined, Everson said Thursday in a telephone conference call with news reporters.

The number of employees conducting criminal investigations, audits and tax collections fell by 25 percent to 19,285 in 2003 from 26,333 in 1996.

"This couldn't have taken place at a worse time," Everson said, because corporate governance declined while there was an erosion of ethics among accountants and lawyers, a culture of greed and an increase in abusive tax shelters. Everson said he believes the agency has stopped the decline in enforcement activity. Audits were up in fiscal 2003.

For example, audits of high-income taxpayers --- those earning $100,000 or more --- reached 139,379 in fiscal 2003, an increase of 24 percent from 2002 and an increase of 52 percent from 2001.

Overall audits of all taxpayers increased 14 percent to 849,296 in fiscal 2003 from 2002. Revenue from IRS collection activity increased to $35.5 billion, a jump of 9 percent from the previous year, the highest level in a decade.

"We're not done yet," Everson said. "We're going to keep working to get better."

Warren Buffett, chairman of Berkshire Hathaway Inc., recently stated in his annual report to shareholders that Berkshire paid $3.3 billion in corporate taxes in 2003, when all corporate receipts totaled about $132 billion. Buffett said corporate income taxes totaled about 7.4 percent of all federal revenues in 2003, down from a post-war peak of 32 percent in 1952.

"We hope our taxes continue to rise in the future," Buffett wrote. "It will mean we are prospering, but we also hope the rest of corporate America antes up along with us."

When told of Buffett's comments, Everson said he is concerned about all the abusive tax shelters in corporate America. He said the IRS will make sure that it gets all the money due to the government.

President Bush's 2005 budget would add $490 million to the IRS, with $393 million devoted to enforcement efforts, particularly high- income taxpayers, corporations and offshore tax evasion.

The IRS will hire 5,000 new auditors, tax collectors, criminal investigators and other staff. About two-thirds of the additional money will be used to focus on corporations, high-income taxpayers and criminal investigations.

Everson said that because the tax code has become more complex, he encouraged taxpayers to enlist the help of a professional or use a tax software program that walks taxpayers through the filing process one step at a time.

-- Michael Hooper