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Criminal Investigation Enforcement Activities and Taxpayer Noncompliance


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  • Jeffrey A. Dubin

    (California Institute of Technology)

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    This article tests empirically whether measurable activities of the IRS Criminal Investigation Division (CI) affect taxpayer compliance. The analysis is based on a state-level cross-section for the time period 1988 through 2001. First, it finds that CI activities have a measurable and significant effect on voluntary compliance. Second, it concludes that the mix of sentenced cases (for tax and money laundering violations) is not a significant determinant of tax compliance. Third, it finds that incarceration and probation (rather than fines) have the most influence on taxpayers. Simulations using the estimated models show that the direct effect of doubling the audit rate on assessed tax collections (reported amounts and additional taxes and penalties) is $21.7 billion. Doubling CI tax and money laundering sentences is forecast to increase assessed collections by $16.0 billion. It estimates the general deterrence or spillover effects from either audit or CI activities to be approximately 95 percent.

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    Bibliographic Info

    Article provided by in its journal Public Finance Review.

    Volume (Year): 35 (2007)
    Issue (Month): 4 (July)
    Pages: 500-529

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    Handle: RePEc:sae:pubfin:v:35:y:2007:i:4:p:500-529

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    Related research

    Keywords: tax evasion; personal income tax; panel data; econometrics;


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    Cited by:
    1. Kirchler, Erich & Wahl, Ingrid, 2010. "Tax compliance inventory TAX-I: Designing an inventory for surveys of tax compliance," Journal of Economic Psychology, Elsevier, Elsevier, vol. 31(3), pages 331-346, June.
    2. Alm, James & Jackson, Betty R. & McKee, Michael, 2009. "Getting the word out: Enforcement information dissemination and compliance behavior," Journal of Public Economics, Elsevier, Elsevier, vol. 93(3-4), pages 392-402, April.
    3. Athanasios O. Tagkalakis, 2014. "The direct and indirect effects of audits on the tax revenue in Greece," Economics Bulletin, AccessEcon, vol. 34(2), pages 984-1001.
    4. James Alm, 2012. "Measuring, Explaining, and Controlling Tax Evasion: Lessons from Theory, Experiments, and Field Studies," Working Papers, Tulane University, Department of Economics 1213, Tulane University, Department of Economics.
    5. Ratto, Marisa & Gemmell, Norman, 2012. "Behavioral responses to taxpayer audits: Evidence from random taxpayer inquiries," Economics Papers from University Paris Dauphine 123456789/11056, Paris Dauphine University.
    6. Lago-Peñas, Ignacio & Lago-Peñas, Santiago, 2010. "The determinants of tax morale in comparative perspective: Evidence from European countries," European Journal of Political Economy, Elsevier, vol. 26(4), pages 441-453, December.
    7. Ratto, Marisa & Thomas, Richard & Ulph, David, 2013. "The indirect effects of auditing taxpayers," Economics Papers from University Paris Dauphine 123456789/4728, Paris Dauphine University.
    8. Phillips, Mark D., 2014. "Deterrence vs. gamesmanship: Taxpayer response to targeted audits and endogenous penalties," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 100(C), pages 81-98.


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