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Criminal Investigation Enforcement Activities and Taxpayer Noncompliance

Author

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  • Jeffrey A. Dubin

    (California Institute of Technology)

Abstract

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.

Suggested Citation

  • Jeffrey A. Dubin, 2007. "Criminal Investigation Enforcement Activities and Taxpayer Noncompliance," Public Finance Review, , vol. 35(4), pages 500-529, July.
  • Handle: RePEc:sae:pubfin:v:35:y:2007:i:4:p:500-529
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    Citations

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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, 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, vol. 93(3-4), pages 392-402, April.
    3. James Alm, 2012. "Measuring, explaining, and controlling tax evasion: lessons from theory, experiments, and field studies," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(1), pages 54-77, February.
    4. 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.
    5. 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.
    6. Kaplanoglou, Georgia & Rapanos, Vassilis T., 2015. "Why do people evade taxes? New experimental evidence from Greece," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 56(C), pages 21-32.
    7. repec:dau:papers:123456789/4728 is not listed on IDEAS
    8. Emilian Dobrescu, 2016. "LINS Curve in Romanian Economy," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 18(41), pages 136-136, February.
    9. Marisa Ratto & Richard Thomas & David Ulph, 2013. "The indirect effects of auditing taxpayers," Post-Print hal-01651143, HAL.
    10. Alm, James & Shimshack, Jay, 2014. "Environmental Enforcement and Compliance: Lessons from Pollution, Safety, and Tax Settings," Foundations and Trends(R) in Microeconomics, now publishers, vol. 10(4), pages 209-274, December.
    11. Phillips, Mark D., 2014. "Deterrence vs. gamesmanship: Taxpayer response to targeted audits and endogenous penalties," Journal of Economic Behavior & Organization, Elsevier, vol. 100(C), pages 81-98.
    12. Gemmell, Norman & Ratto, Marisa, 2012. "Behavioral Responses to Taxpayer Audits: Evidence From Random Taxpayer Inquiries," National Tax Journal, National Tax Association;National Tax Journal, vol. 65(1), pages 33-57, March.

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