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Sequences of audits, tax compliance, and taxpaying strategies

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  • Kastlunger, Barbara
  • Kirchler, Erich
  • Mittone, Luigi
  • Pitters, Julia

Abstract

The effect of different audit patterns on future compliance is studied in two experiments. A repeated measures design is used with participants filing taxes 60 times. Study 1 focuses on taxpayers' immediate reactions to audits and examines whether a strong decrease in compliance following an audit is caused by either misperception of chance or loss repair. The second purpose of this study is to investigate the effect of audit positioning in a "taxpaying life span". The results suggest that the decrease of compliance found after an audit is most likely caused by misperception of chance, while loss-repair tendencies are of moderate relevance. Moreover, results confirm that contrary to later audits, early audit experiences in a "taxpaying life span" lead to increased compliance. Independent of audit positioning, compliance decreases if participants are not audited over an extended period of time. It is hypothesized that just one further audit may suffice to increase compliance again. Study 2 confirms this assumption. The results show the relevance of specific audit patterns on tax compliance.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Psychology.

Volume (Year): 30 (2009)
Issue (Month): 3 (June)
Pages: 405-418

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Handle: RePEc:eee:joepsy:v:30:y:2009:i:3:p:405-418

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Web page: http://www.elsevier.com/locate/joep

Related research

Keywords: Tax compliance Audits Misperception of chance Loss repair Taxpaying strategies;

References

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Citations

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Cited by:
  1. Soliman, Amal & Jones, Philip & Cullis, John, 2014. "Learning in experiments: Dynamic interaction of policy variables designed to deter tax evasion," Journal of Economic Psychology, Elsevier, vol. 40(C), pages 175-186.
  2. James Alm & Erich Kirchler & Stephan Muehlbacher, 2012. "Combining Psychology and Economics in the Analysis of Compliance: From Enforcement to Cooperation," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, vol. 42(2), pages 133-152, September.
  3. Tan, Fangfang & Yim, Andrew, 2014. "Can strategic uncertainty help deter tax evasion? An experiment on auditing rules," Journal of Economic Psychology, Elsevier, vol. 40(C), pages 161-174.
  4. Schneider, Friedrich, 2012. "The Shadow Economy and Work in the Shadow: What Do We (Not) Know?," IZA Discussion Papers 6423, Institute for the Study of Labor (IZA).
  5. Zhixin Dai & Robin M. Hogarth & Marie Claire Villeval, 2014. "Ambiguity on audits and cooperation in a public goods game," Working Papers halshs-00944500, HAL.
  6. Boris Maciejovsky & Herbert Schwarzenberger & Erich Kirchler, 2012. "Rationality Versus Emotions: The Case of Tax Ethics and Compliance," Journal of Business Ethics, Springer, vol. 109(3), pages 339-350, September.
  7. Lisa Bruttel & Tim Friehe, 2010. "On the path-dependence of tax compliance," TWI Research Paper Series 59, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
  8. Hashimzade, Nigar & Myles, Gareth D. & Page, Frank & Rablen, Matthew D., 2014. "Social networks and occupational choice: The endogenous formation of attitudes and beliefs about tax compliance," Journal of Economic Psychology, Elsevier, vol. 40(C), pages 134-146.
  9. Fochmann, Martin & Kroll, Eike B., 2014. "The effects of rewards on tax compliance decisions," arqus Discussion Papers in Quantitative Tax Research 163, arqus - Arbeitskreis Quantitative Steuerlehre.
  10. Kirchler, Erich & Wahl, Ingrid, 2010. "Tax compliance inventory TAX-I: Designing an inventory for surveys of tax compliance," Journal of Economic Psychology, Elsevier, vol. 31(3), pages 331-346, June.
  11. James Alm & Erich Kirchler & Stephan Muehlbacher & Katharina Gangl & Eva Hofmann & Christoph Kogler & Maria Pollai, 2012. "Rethinking the Research Paradigms for Analysing Tax Compliance Behaviour," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 13(2), pages 33-40, 07.
  12. Erich Kirchler & Stephan Muehlbacher & Barbara Kastlunger & Ingrid Wahl, 2007. "Why Pay Taxes? A Review of Tax Compliance Decisions," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0730, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  13. James Alm & Kim M. Bloomquist & Michael McKee, 2013. "When You Know Your Neighbor Pays Taxes: Information, Peer Effects, and Tax Compliance," Working Papers 13-22, Department of Economics, Appalachian State University.
  14. Kastlunger, Barbara & Dressler, Stefan G. & Kirchler, Erich & Mittone, Luigi & Voracek, Martin, 2010. "Sex differences in tax compliance: Differentiating between demographic sex, gender-role orientation, and prenatal masculinization (2D:4D)," Journal of Economic Psychology, Elsevier, vol. 31(4), pages 542-552, August.
  15. Sandro Casal & Luigi Mittone, 2014. "Social Esteem versus Social Stigma: the role of anonymity in an income reporting game," CEEL Working Papers 1401, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
  16. Pickhardt, Michael & Prinz, Aloys, 2014. "Behavioral dynamics of tax evasion – A survey," Journal of Economic Psychology, Elsevier, vol. 40(C), pages 1-19.

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