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Getting the word out: Enforcement information dissemination and compliance behavior

Author Info

  • Alm, James
  • Jackson, Betty R.
  • McKee, Michael

Abstract

The question for the tax authority is how individuals become aware of enforcement effort. To be an effective tool in reducing tax evasion taxpayers must be aware of the current audit and penalty regime. We use laboratory experiments to examine the compliance impact of types of information dissemination regarding audit frequency and results. The information includes "official" information disseminated by the tax authority, and "unofficial", or informal, communications among taxpayers. Our results indicate that the effect of the type of post-audit information is conditional on whether the taxpayer is well informed of the audit rate prior to filing. We find that the tax authority would be served by pre-announcing audit rates credibly and by emphasizing the previous period audit frequency in annual reporting of enforcement effort.

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File URL: http://www.sciencedirect.com/science/article/pii/S0047-2727(08)00166-7
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Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 93 (2009)
Issue (Month): 3-4 (April)
Pages: 392-402

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Handle: RePEc:eee:pubeco:v:93:y:2009:i:3-4:p:392-402
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505578

Keywords: Tax compliance Tax audits Social norms;

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  1. Myles, Gareth D. & Naylor, Robin A., 1996. "A model of tax evasion with group conformity and social customs," European Journal of Political Economy, Elsevier, vol. 12(1), pages 49-66, April.
  2. Smith, Vernon L & Walker, James M, 1993. "Monetary Rewards and Decision Cost in Experimental Economics," Economic Inquiry, Western Economic Association International, vol. 31(2), pages 245-61, April.
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  14. Allingham, Michael G. & Sandmo, Agnar, 1972. "Income tax evasion: a theoretical analysis," Journal of Public Economics, Elsevier, vol. 1(3-4), pages 323-338, November.
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