Do Audits Deter or Provoke Future Tax Noncompliance? Evidence on Self-employed Taxpayers

Do Audits Deter or Provoke Future Tax Noncompliance? Evidence on Self-employed Taxpayers
Author: Sebastian Beer
Publisher: International Monetary Fund
Total Pages: 22
Release: 2019-10-11
Genre: Business & Economics
ISBN: 1513515373

This paper employs unique tax administrative data and operational audit information from a sample of approximately 7,500 self-employed U.S. taxpayers to investigate the effects of operational tax audits on future reporting behavior. Our estimates indicate that audits can have substantial deterrent or counter-deterrent effects. Among those taxpayers who receive an additional tax assessment, reported taxable income is estimated to be 64% higher in the first year after the audit than it would have been in the absence of the audit. In contrast, among those taxpayers who do not receive an additional tax assessment, reported taxable income is estimated to be approximately 15% lower the year after the audit than it would have been had the audit not taken place. Our results suggest that improved targeting of audits towards noncompliant taxpayers would not only yield more direct audit revenue, it would also pay dividends in terms of future tax collections.

The Revenue Administration Gap Analysis Program

The Revenue Administration Gap Analysis Program
Author: International Monetary
Publisher: International Monetary Fund
Total Pages: 38
Release: 2021-08-27
Genre: Business & Economics
ISBN: 1513577174

It is generally difficult to measure revenue not collected due to noncompliance, but a growing number of countries now regularly produce and publish estimated revenue losses. Good tax gap analysis enables the detection of changes in taxpayer behavior by consistent estimates over time. This Technical Note sets out the theoretical concepts for personal income tax (PIT) gap estimation, the different measurement approaches available, and their implications for the scope and presentation of statistics. The note also focuses on the practical steps for measuring the PIT gap by establishing a random audit program to collect data, and how to scale findings from the sample to the population.

GAO Documents

GAO Documents
Author: United States. General Accounting Office
Publisher:
Total Pages: 1030
Release: 1982
Genre:
ISBN:

Catalog of reports, decisions and opinions, testimonies and speeches.