Does credit-card information reporting improve small-business tax compliance?
Joel Slemrod (),
Jeffrey Hoopes (),
Daniel Reck and
Journal of Public Economics, 2017, vol. 149, issue C, 1-19
We investigate the response of small businesses operating as sole proprietorships to Form 1099-K, an information report introduced in 2011 which provides the Internal Revenue Service with information about electronic sales (e.g., credit card sales). The overall impact of the policy appears to be relatively small. However, theory and distributional analysis isolates a subset of taxpayers expected to be especially sensitive to reporting, who report receipts equal to or slightly exceeding the receipts reported on 1099-K. Among this set of taxpayers, information reporting induced more complete tax reporting–30% of sensitive taxpayers filed a return declaring business income for the first time, and among those that were already filing, we estimate an increase in reported receipts by up to 24%. These taxpayers largely offset increased reported receipts with increased reported expenses, which do not face information reporting, diminishing the impact on reported net taxable income.
Keywords: Tax evasion; Information reporting; Small businesses; Tax enforcement; Administrative data (search for similar items in EconPapers)
JEL-codes: H20 H23 H25 H26 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
Working Paper: Does credit-card information reporting improve small-business tax compliance? (2017)
Working Paper: Does Credit-card Information Reporting Improve Small-business Tax Compliance? (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:149:y:2017:i:c:p:1-19
Access Statistics for this article
Journal of Public Economics is currently edited by R. Boadway and J. Poterba
More articles in Journal of Public Economics from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().