Remote tax authority

Andrew Belnap, Anthony Welsch and Braden Williams

Journal of Accounting and Economics, 2023, vol. 75, issue 2

Abstract: Tax enforcement and compliance are critical features of any tax system. One way that prior studies examine these topics is by measuring taxpayer responses to different types of letters from a tax authority. We extend this research by focusing on ‘remote firms’ – firms with no physical presence in the tax authority's jurisdiction – and examining sales tax compliance. Specifically, we partner with the Texas Comptroller's office to conduct a randomized field experiment that examines whether and why firms comply with remote tax authority. Using a sample of remote firms with a recent history of late filing, we find that tax authority correspondence increases the average reported sales tax base by 105 percent and tax payments by $3,711, although the effects are short-lived. Our evidence suggests that the effect is driven by increased salience of firms' tax obligations. Our study offers key insights given the growth in cross-border transactions and remote taxation.

Keywords: Sales tax; Tax compliance; Tax enforcement; Field experiment; Remote taxation (search for similar items in EconPapers)
JEL-codes: C93 H25 H71 K34 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:75:y:2023:i:2:s0165410122000933

DOI: 10.1016/j.jacceco.2022.101570

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