Individual Income Tax Compliance and Information Reporting: What Do the U.S. Data Show?

Mark D. Phillips

National Tax Journal, 2014, vol. 67, issue 3, 531-568

Abstract: This paper examines 2001 National Research Program data to assess the role of information reporting in explaining individual income tax compliance in the United States. Taxpayers are largely compliant in self-reporting third-party “matched” income; furthermore, many taxpayers underreport 100 percent of “unmatched” income. However a majority of noncompliant taxpayers, particularly those with large amounts of unmatched income, underreport only a portion of it. Taxpayers exhibit signifcant heterogeneity with regard to the critical amount of unmatched income at which they switch from full to partial noncompliance. The increase in underreported income that arises from a marginal increase in unmatched income also varies across taxpayers.

Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:ntj:journl:v:67:y:2014:i:3:p:531-568

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