Sample-Audit Tax Assessment for Businesses: What's Fair?

S James Press

Journal of Business & Economic Statistics, 1995, vol. 13, issue 3, 357-59

Abstract: How should a revenue agency assess a business taxpayer's income on the basis of a sample audit of transactions? The agency would like to maximize revenue while minimizing the risk that the taxpayer will be assessed more than he really owes. The taxpayer argues that and, therefore, the lower bound of a one-sided confidence interval should be used by the assessor. The revenue agency argues that the midpoint of such a confidence interval should be used but such practice is being challenged in the courts.

Date: 1995
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