 Dynamic effects of tax audits and the role of intentionsTobias Gabel Christiansen Journal of Public Economics, 2024, vol. 234, issue C Abstract: Using a random audit program covering more than 17,000 tax returns, I study how tax audits affect the subsequent compliance behavior of self-employed with varying intentions to comply. Leveraging novel information provided by auditors on taxpayers’ perceived willingness to comply, I find that unintentional non-compliers, driven by inattention or misunderstandings of the tax rules, exhibit higher compliance in subsequent years. This results in a revenue increase equivalent to 340% of the tax uncovered from the audit after 5 years. In contrast, intentional non-compliers who deliberately evade taxes and are typically targeted for operational audits do not respond to audits and have a low recovery rate for evaded taxes. Based on these findings, I illustrate how risk scores derived from pre-audit information can be used to target taxpayers expected to respond strongly to audits, leading to increased revenue gains of 87% compared to an approach that focuses on initial revenue from audits. Finally, I propose targeted and personalized guidance as a cheaper alternative to mitigate unintentional misreporting compared to expensive audits. Keywords: Tax audits; Tax compliance; Tax revenue; Risk score; Self-employed (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:234:y:2024:i:c:s0047272724000574 DOI: 10.1016/j.jpubeco.2024.105121 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 |
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