The Dynamic Effects of Tax Audits
Arun Advani,
William Elming and
Jonathan Shaw
Additional contact information
William Elming: IFS and TARC at the time of involvement in this work
Jonathan Shaw: Financial Conduct Authority
The Review of Economics and Statistics, 2023, vol. 105, issue 3, 545-561
Abstract:
We study the effects of audits on long run compliance behavior using a random audit program covering more than 53,000 tax returns. We find that audits raise reported tax liabilities for five years after audit, effects are longer-lasting for more stable sources of income, and only individuals found to have made errors respond to audit. A total of 60%–65% of revenue from audit comes from the change in reporting behavior. Extending the standard model of rational tax evasion, we show that these results are best explained by information revealed by audits constraining future misreporting. Together these imply that more resources should be devoted to audits, audit targeting should account for reporting responses, and performing audits has additional value beyond merely threatening them.
Date: 2023
References: Add references at CitEc
Citations: View citations in EconPapers (6)
Downloads: (external link)
https://doi.org/10.1162/rest_a_01101
Related works:
Working Paper: The Dynamic Effects of Tax Audits (2019) 
Working Paper: The Dynamic Effects of Tax Audits (2019) 
Working Paper: The dynamic effects of tax audits (2017) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:tpr:restat:v:105:y:2023:i:3:p:545-561
Ordering information: This journal article can be ordered from
https://mitpressjour ... rnal/?issn=0034-6535
Access Statistics for this article
The Review of Economics and Statistics is currently edited by Pierre Azoulay, Olivier Coibion, Will Dobbie, Raymond Fisman, Benjamin R. Handel, Brian A. Jacob, Kareen Rozen, Xiaoxia Shi, Tavneet Suri and Yi Xu
More articles in The Review of Economics and Statistics from MIT Press
Bibliographic data for series maintained by The MIT Press ().