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Efficient tax reporting: The effects of taxpayer information services


  • Christian A. Vossler
  • Michael McKee


As policy makers recognize the complexity of the tax system can result in some “evasion” being due to errors, there has been increasing focus on the role of taxpayer services as a tool in the enforcement regime. Such programs can improve the image of the tax agency but the critical issue is the effect on tax reporting. While the earlier focus has been on tax evasion, tax overreporting is also an issue since it leads to inefficient resource allocation. Thus, the present paper focusses on the effectiveness of taxpayer service programs in enhancing tax reporting. Data are collected on tax reporting decisions via laboratory experiments designed to implement the tax reporting task. To investigate the effects of taxpayer services, we “complicate” these compliance decisions of subjects, and then provide “services” from the “tax administration” that allow subjects to compute more easily their tax liabilities. Briefly, we find that our subjects are less likely to file when tax liability is uncertain but the provision of information offsets this effect; it appears that simply providing the service, even an imperfect service, increases the propensity to file and the accuracy of the filing. Key Words: tax information services; tax reporting; behavioral economics; experimental economics

Suggested Citation

  • Christian A. Vossler & Michael McKee, 2013. "Efficient tax reporting: The effects of taxpayer information services," Working Papers 13-24, Department of Economics, Appalachian State University.
  • Handle: RePEc:apl:wpaper:13-24

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    References listed on IDEAS

    1. Brian Erard & Chih-Chin Ho, 1999. "Searching for Ghosts: Who Are the Nonfilers nd How Much Tax Do They Owe?," Carleton Economic Papers 99-11, Carleton University, Department of Economics, revised Jul 2001.
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    5. 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.
    6. Frank A. Cowell, 1990. "Cheating the Government: The Economics of Evasion," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262532484, January.
    7. Cummings, Ronald G. & Martinez-Vazquez, Jorge & McKee, Michael & Torgler, Benno, 2009. "Tax morale affects tax compliance: Evidence from surveys and an artefactual field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 70(3), pages 447-457, June.
    8. Jung, Woon-Oh, 1991. "Tax reporting game under uncertain tax laws and asymmetric information," Economics Letters, Elsevier, vol. 37(3), pages 323-329, November.
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    13. Powell, Melanie & Ansic, David, 1997. "Gender differences in risk behaviour in financial decision-making: An experimental analysis," Journal of Economic Psychology, Elsevier, vol. 18(6), pages 605-628, November.
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    Cited by:

    1. Christian Vossler & Michael McKee, 2015. "Behavioral effects of tax withholding on tax compliance: Implications for information initiatives," Working Papers 15-12, Department of Economics, Appalachian State University.
    2. Christian A. Vossler & Scott M. Gilpatric, 2017. "Endogenous Tax Audits and Taxpayer Assistance Services: Theory and Experiments," Working Papers 2017-01, University of Tennessee, Department of Economics.

    More about this item

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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