Article

Persuasive Communications: Tax Compliance Enforcement Strategies for Sole Proprietors*

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Abstract

Knowing how to encourage honest tax reporting by small business proprietors is a nontrivial issue. Sole proprietors represent an important group of taxpayers to examine, because they have both a high cost of compliance and a high opportunity for noncompliance. At the same time, tax agencies need to balance the high costs of noncompliance with the high costs of traditional enforcement strategies. Consequently, researchers have suggested using persuasive communications with either normative or sanction appeals. However, prior research on persuasive communications has had mixed results. We examine the effect of normative and sanction appeals in a controlled field experiment in the United Kingdom using actual data reported by over 7,300 sole proprietors. Each participant in a treatment group received one of five different letters ranging from a simple offer of assistance to a letter advising that his or her tax return had already been preselected for audit. Using a concise instrument targeted toward high opportunity behavior, sales, and net profit, we find that tax compliance appeals resulted in greater compliance, particularly among recipients who do not use a paid preparer. We also find that sanction appeals tend to be significantly more effective than normative appeals for self-preparers on turnover and on net profit. For paid-preparer returns, the sanction appeals were also more effective than the normative appeal, but only on reported turnover. In contrast, the normative and sanction appeals were statistically equivalent for change in net profit on the paid-preparer returns.

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... Tax authorities deploy a variety of measures such as audits, prosecutions, naming-and-shaming (shaming) and persuasive communications to enforce compliance (Alm & Torgler, 2011;Devos & Zackrisson, 2015;Hasseldine et al., 2007;Luttmer & Singhal, 2014). Shaming which includes publicizing tax offenders, their offenses and punishments to deter tax evasion and raise tax revenue, has received limited attention in the tax literature. ...
... Theoretically, the results of the current work provide empirical evidence that shaming tax evaders has a general deterrence effect, which is consistent with the deterrence aspect of Sherman's (1993) defiance theory. Furthermore, this study has drawn from the Yale Model of Persuasion and Hasseldine et al.'s (2007) persuasive communication strategies to predict and find that higher persuasion is positively related to tax compliance intentions. The current study presents evidence that an integrative framing of punishment disclosures can improve tax compliance. ...
... Although tax authorities have continued to use traditional methods as tax enforcement techniques including audits, incarcerations, penalties, shaming and third-party reporting requirements, the authorities have increasingly deployed persuasive communications to alter taxpayer perceptions of tax evasion and increase voluntary compliance (Alm & Torgler, 2011;Devos & Zackrisson, 2015). Previous tax literature has examined the success of using persuasive communications to improve tax compliance but reported mixed results (Blumenthal et al., 2001;Hasseldine et al., 2007;Perez-Truglia & Troiano, 2018). For example, Blumenthal et al. (2001) and Perez-Truglia and Troiano (2018) find that moral appeal is not an effective mechanism to reduce tax evasion. ...
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Although naming-and-shaming (shaming) is a commonly used tax enforcement mechanism, little is known about the efficacy of shaming tax evaders. Through two experiments, this study examines the effects of shaming tax evaders on third-party observers’ perceptions of retributive justice and tax compliance intentions, and whether the salience of persuasion of observers moderates these relationships. Based on insights from defiance theory, the message learning model, and persuasive communications, this study predicts and finds that shaming evaders increases observers’ tax compliance intentions. Furthermore, the results show that higher persuasion, which includes sanction and normative appeals, affects observers’ tax compliance intentions. This study also suggests that shaming has a positive effect on perceptions of retributive justice. Importantly, the results reveal that perceptions of retributive justice in shaming punishment mediate the effect of shaming on tax compliance intentions. The implications for theory and practice are discussed.
... 2014; Hasseldine et al., 2007;Iyer, et al., 2010;Kleven, Knudsen, Kreiner, Pedersen, & Saez, 2011;Pomeranz, Alesina, Asher, Casaburi, Chetty, Cutler, Weinzierl, 2013;Schwartz & Orleans, 1967). While some of these studies have demonstrated significant improvements in tax compliance, others have not (Hallsworth, 2014) or have found an intervention to backfire by reducing tax compliance (Ariel, 2012;Gangl et al., 2014;Mendoza, Wielhouwer, & Kirchler, 2017). ...
... Four potential intervention targets had favourable assessments on all three criteria: 1) strengthening perceived risk; 2) weakening descriptive norms; 3) weakening adversarial construal of tax authority, and 4) strengthening collaborative construal of tax authority. Strengthening perceived risk of audit has been reported to increase tax compliance between 2 and 14.1 percentage points (Del Carpio, 2014;Fellner, Sausgruber, & Traxler, 2013;Hasseldine, Hite, James, & Toumi, 2007;Pomeranz, Alesina, Asher, Casaburi, Chetty, Cutler, Weinzierl, 2013). Similarly, descriptive norms have been suggested to improve compliance by 1.3 to 5.1 percentage points (Del Carpio, 2014;Hallsworth, List, Metcalfe, & Vlaev, 2017;Hasseldine, Hite, James, & Toumi, 2007). ...
... Strengthening perceived risk of audit has been reported to increase tax compliance between 2 and 14.1 percentage points (Del Carpio, 2014;Fellner, Sausgruber, & Traxler, 2013;Hasseldine, Hite, James, & Toumi, 2007;Pomeranz, Alesina, Asher, Casaburi, Chetty, Cutler, Weinzierl, 2013). Similarly, descriptive norms have been suggested to improve compliance by 1.3 to 5.1 percentage points (Del Carpio, 2014;Hallsworth, List, Metcalfe, & Vlaev, 2017;Hasseldine, Hite, James, & Toumi, 2007). Finally, altering the construal of tax authority has been recommended on conceptual grounds (Kirchler, Hoelzl, & Wahl, 2008), although more empirical evidence is needed to estimate its effectiveness. ...
Article
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Changing complex behaviors such as tax evasion may require several behavioral interventions, or nudges. We developed a tailored compound intervention approach to increase employers’ payroll tax compli-ance in Estonia’s construction industry. First, we used anthropological methods to gain insights into the deci-sion processes of employers and employees in the industry (Study 1, N=16). These insights were combined with behavioral decision-making principles to design an intervention e-mail with the aim to strengthen per-ceived risks and weaken descriptive norms of non-compliance as well as to strengthen collaborative and weaken adversarial construal of tax authority. The compound intervention was tested using a three-armed non-blinded randomized controlled trial (Study 2, N=4770) involving all employers whose declared wages were below 70% of the industry’s average. The intervention significantly increased declared payroll taxes by 5.1% to 6.1% on average across the two treated groups over a 3-month follow-up period (p< .0001) and was therefore effective. It remains unclear which constituent nudges of our compound intervention were crucial for this effect. These findings suggest that the compound intervention approach may be a feasible avenue for designing effective interventions in under-studied contexts.
... One reason for these mixed effects may be their relatively narrow focus on targeting a single underlying psychological mechanism at a time. For instance, many field experiments have followed a non-deterrence approach and tested the effects of targeting social norms (Blumenthal & Christian, 2001;Castro & Scartascini, 2015;Fellner, Sausgruber, & Traxler, 2013;Hallsworth et al., 2017;Hasseldine, Hite, James, & Toumi, 2007;John & Blume, 2018), moral persuasion (Ariel, 2012;Fellner et al., 2013;Hasseldine et al., 2007;Torgler, 2004;Wenzel, 2006), and reciprocity (Blumenthal & Christian, 2001;Castro & Scartascini, 2015;Hallsworth et al., 2017;Hasseldine et al., 2007). Other experiments have followed a deterrence approach and tested the effects of increasing awareness of legal sanctions (Hasseldine et al., 2007;Iyer, Reckers, & Sanders, 2010;Schwartz & Orleans, 1967), and the perceived risk of getting caught or being audited (Ariel, 2012;Fellner et al., 2013;Gangl et al., 2014;Hasseldine et al., 2007;Iyer et al., 2010;Kleven, Knudsen, Kreiner, Pedersen, & Saez, 2011;Pomeranz et al., 2013;Schwartz & Orleans, 1967). ...
... One reason for these mixed effects may be their relatively narrow focus on targeting a single underlying psychological mechanism at a time. For instance, many field experiments have followed a non-deterrence approach and tested the effects of targeting social norms (Blumenthal & Christian, 2001;Castro & Scartascini, 2015;Fellner, Sausgruber, & Traxler, 2013;Hallsworth et al., 2017;Hasseldine, Hite, James, & Toumi, 2007;John & Blume, 2018), moral persuasion (Ariel, 2012;Fellner et al., 2013;Hasseldine et al., 2007;Torgler, 2004;Wenzel, 2006), and reciprocity (Blumenthal & Christian, 2001;Castro & Scartascini, 2015;Hallsworth et al., 2017;Hasseldine et al., 2007). Other experiments have followed a deterrence approach and tested the effects of increasing awareness of legal sanctions (Hasseldine et al., 2007;Iyer, Reckers, & Sanders, 2010;Schwartz & Orleans, 1967), and the perceived risk of getting caught or being audited (Ariel, 2012;Fellner et al., 2013;Gangl et al., 2014;Hasseldine et al., 2007;Iyer et al., 2010;Kleven, Knudsen, Kreiner, Pedersen, & Saez, 2011;Pomeranz et al., 2013;Schwartz & Orleans, 1967). ...
... One reason for these mixed effects may be their relatively narrow focus on targeting a single underlying psychological mechanism at a time. For instance, many field experiments have followed a non-deterrence approach and tested the effects of targeting social norms (Blumenthal & Christian, 2001;Castro & Scartascini, 2015;Fellner, Sausgruber, & Traxler, 2013;Hallsworth et al., 2017;Hasseldine, Hite, James, & Toumi, 2007;John & Blume, 2018), moral persuasion (Ariel, 2012;Fellner et al., 2013;Hasseldine et al., 2007;Torgler, 2004;Wenzel, 2006), and reciprocity (Blumenthal & Christian, 2001;Castro & Scartascini, 2015;Hallsworth et al., 2017;Hasseldine et al., 2007). Other experiments have followed a deterrence approach and tested the effects of increasing awareness of legal sanctions (Hasseldine et al., 2007;Iyer, Reckers, & Sanders, 2010;Schwartz & Orleans, 1967), and the perceived risk of getting caught or being audited (Ariel, 2012;Fellner et al., 2013;Gangl et al., 2014;Hasseldine et al., 2007;Iyer et al., 2010;Kleven, Knudsen, Kreiner, Pedersen, & Saez, 2011;Pomeranz et al., 2013;Schwartz & Orleans, 1967). ...
Preprint
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Changing complex behaviours such as tax evasion often requires combining several behavioural insights. We developed a tailored compound intervention approach to increase employers’ payroll tax compliance in Estonia’s construction industry. First, we used anthropological methods to gain insights into the decision processes of employers and employees in the industry (Study 1, N=16). These insights were combined with behavioural decision-making principles to design an e-mail with the aim to strengthen perceived risks and weaken descriptive norms of non-compliance as well as to strengthen collaborative and weaken adversarial construal of tax authority. The intervention was tested using a three-armed (1:1:1) non-blinded randomised controlled trial (Study 2, N=4770) involving all employers whose declared wages were below 70% of the industry’s average. The intervention significantly increased declared payroll taxes by 5.1% to 6.1% over a 3-month follow-up period (γI=11.95,p= 0.0001; γE=15.38,p< 0.0001). These findings demonstrate the feasibility of the compound intervention approach.
... Tax literature has documented that individuals are more likely to engage in tax-compliant behavior if audit and detection risks are emphasized (e.g., Hasseldine, Hite, James, & Toumi, 2007;Iyer, Reckers, & Sanders, 2010). This suggests that taxpayer compliance can be motivated through the framing of audit risk. ...
... As discussed previously, individuals are more likely to engage in tax-compliant behaviors when confronted with audit and detection risks (e.g., Hasseldine et al., 2007;Iyer et al., 2010). Indeed, detection rates are a major factor in taxpayer compliance (Park & Hyun, 2003;Porcano, 1988;Slemrod, 2007). ...
... According to Allingham and Sandmo (1972), increasing the penalties led to enhancing tax compliance. A significant relationship between the severity of criminal sanction and tax compliance was found by Witte and Woobury (1985), and by Hasseldine, Hite, James, and Toumi (2007). Ngo et al. (2019) indicated that there was a positive relationship between tax compliance and tax penalty. ...
... Thus, hypothesis H3 is accepted. This result is consistent with Hasseldine et al. (2007) and Ngo et al. (2019) that increasing the tax penalties led to increasing tax compliance of business households. ...
Article
This paper aims to identify key factors influencing the tax compliance of business households in Ho Chi Minh City, Vietnam. The researchers surveyed 215 owners of business households in Ho Chi Minh City from June 2020 to July 2020. Analysis of the model includes the 4 phases following: (i) Applying the expert methodology; (ii) Cronbach’s test for reliability of the scale and exploratory factors analysis (EFA); (iii) Pearson correlation coefficient analysis; (iv) Regression analysis and hypothesis test of a model. The results of this study revealed that factors affecting tax compliance of business households in Ho Chi Minh City, Vietnam in descending order of importance: Tax Rate, Tax Knowledge, Tax Penalty, Personal Norm, and Perceived Fairness (of the system). Moreover, the tax rate had a negative relationship with tax compliance and the others had a positive one with tax compliance. Finally, the research also proposes some implications to enhance tax compliance of business households and directions for further research.
... In a similar study, Feld and Frey (2006) showed that the existence of a severe tax penalty will curtail a number of practices of tax evasion. In the same vein, Hasseldine et al. (2007) also confirms that the severity of criminal sanctions is significantly associated with tax evasion. ...
... Therefore, the result indicates the crucial role that tax penalty plays in influencing the decision of SMEs with regards to income tax evasion. Also, the result is consistent with findings of some previous studies related to tax penalty and tax evasion (Chau and Leung, 2009;Feld and Frey, 2006;Hasseldine et al., 2007). This negative outcome can be attributed to the fact that owners/managers of SMEs behave in a rational manner. ...
Article
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Tax evasion remains an issue confronting most policy makers worldwide. Palestine, as an evolving developing country highly depends on tax revenue and funds from international aids to finance the country's growth plan. The current study aims at examining relationships between probability of detection, tax penalty, tax rate and income tax evasion by applying the Deterrence Theory. A proportionate sampling technique was employed to collect data for the study through the use of questionnaires. The total number of useable questionnaires collected for analysis was 184. The collected data were analysed using the Partial Least Square (PLS). The result of analysed data shows that probability of detection and tax penalty were found to be negatively significant, while tax rate was positively significant in relation to income tax evasion. The implication of the findings of the current study is that income tax administration effectiveness can maximize tax collections and discourage tax evasion.
... This assumption is supported by several studies with full-scale experiments on taxpayers or users of social benefits. Slemrod, Blumenthal, and Christian (2001), Hasseldine, Hite, James, and Toumi (2007) and Kleven, Knudsen, Kreiner, and Saez (2011) studied the effect of general audit threats on declared income, whereas Engström and Hesselius (2007) studied the effect of audit threats on claims of social benefits. Appelgren (2008) studied specifically the effect of an information strategy on taxpayers, i.e., where the threat was directed towards those who declared the lowest income. ...
... Surprisingly, the effect was reversed for high income taxpayers. Hasseldine et al. (2007) studied the effect of five variations of warning letters to approximately 5000 sole proprietors in the UK. The weakest letter contained "We are here to give you advice and support if you need it" whereas the strongest letter announced "Your tax return has been chosen for enquiry". ...
Article
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The problem studied in this survey is how to optimize the allocation of audit resources over an auditee population with respect to available population statistics. The auditees are assumed to optimize their expected utility based on information about the audit strategy. This survey is limited to models where the auditee can vary the fraud amount along a continuous scale. If the auditor is not able or willing to announce the audit strategy, a Nash equilibrium can be derived in which the auditor and auditee correctly anticipate each other's strategies. If the auditor announces the audit strategy in advance, the problem is formulated as a sequential game with perfect information which is solved as an optimization problem. Early models in the literature resulted in unrealistically high degrees of fraud. Later models have incorporated a split into one group of inherently honest auditees and another group of potentially dishonest auditees. The fraction of inherently honest auditees is exogenous. In this paper, the four combinations of non-announcing/pre-announcing the strategy and all potentially dishonest/some inherently honest auditees are studied. For the case of pre-announcing the strategy with some inherently honest auditees, two new solution methods are presented. Two main conclusions are as follows. First, models with some inherently honest auditees have greater external validity. Second, when a pre-announced strategy is feasible, as it often is with tax and benefit audits, the pre-announced strategy is preferred by the auditor over the non-announced strategy.
... Third, we extend the tax compliance literature that examines factors affecting individuals' decisions to honestly report taxable income. Previous research has identified how taxpayers' individual differences (Kaplan et al. 1997;Henderson and Kaplan 2005), social norms (Bobek et al. 2007), perceptions of fairness Farrar and Thorne 2016), and tax authority policies (Farrar and Thorne 2016;Chung and Trivedi 2003;Trivedi et al. 2003;Hasseldine et al. 2007) can influence honest tax reporting. We extend this literature by examining how taxpayers' prosocial acts and personal values can interact and influence their tax reporting behaviours. ...
... Third, we extend the tax compliance literature that examines factors affecting individuals' decisions to honestly report taxable income. Previous research has identified how taxpayers' individual differences (Kaplan et al. 1997;Henderson and Kaplan 2005); social norms (Bobek et al. 2007); perceptions of fairness Farrar and Thorne 2016); and tax authority procedures, (Farrar and Thorne 2016;Chung and Trivedi 2003;Trivedi et al. 2003;Hasseldine et al. 2007) can influence honest tax reporting. We extend this literature by studying how the framing of the sharing economy (being prosocial or purely economic) and moral licensing can influence tax reporting behaviours. ...
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In the last decade, advances in technology have significantly disrupted the way firms provide goods and services. At the forefront of this technological disruption is the sharing economy, where individuals earn income by providing services or sharing assets through peer-to-peer (P2P) platforms. With global revenues in the sharing economy projected to increase substantially in the next decade, income from this economy will continue to be an important source of tax revenues for governments around the world. However, sceptics argue that the sharing economy inherently lends itself to dishonest reporting of taxable income. We employ an online experiment, using 746 taxpayers, to observe whether the prosocial benefits often promoted by P2P platforms reduce honest reporting of taxable sharing economy income. Consistent with moral licensing theory, we find that earning income from a prosocial-oriented P2P platform liberates taxpayers to dishonestly report their sharing economy income, and this result is fully driven by taxpayers whose personal values are incongruent with values promoted by the P2P platform. Our paper contributes to the limited but growing research on the sharing economy and its implications for ethical decisions. It also adds to the moral licensing literature by identifying value congruency as an important moderator for moral licensing effect.
... Notification letters are postal or email communications from enforcement agencies to companies or workers, giving information on applicable legal obligations and systems of control in place. Although this has been most widely applied to tax compliance (Beeby, 2017;Hasseldine et al., 2007), notification letters have also recently been used by labour inspectorates (see . ...
Technical Report
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This report evaluates undeclared work in the tourism sector in the EU and how this can be tackled. To do so, the prevalence and character of undeclared work in the tourism sector is analysed using data from the European Working Conditions Survey (EWCS), European Labour Force Survey (EU-LFS) and Eurobarometer surveys on undeclared work, as well as desk-based research to identify the multifarious types of undeclared work in the diverse industries comprising the tourism sector. Based on this detailed understanding, the report considers how undeclared work can be tackled in this sector. Undeclared work in the tourism sector  In 2016, 1 in 10 enterprises (2.4 million) in the European non-financial business economy were in tourism industries, employing 13.6 million persons (9.5 % of the EU workforce). The majority of these workers (8 out of 10) are in food and beverage serving activities (58.7 % of all employment in the tourism sector) and the accommodation sector (19.7 %).  14 % of workers in the accommodation and food services sector are in unregistered employment (compared with 5 % of the overall EU workforce). 12 % of all unregistered employment in the EU is in this sector.  2 % of workers in the accommodation and food services sector are in bogus self-employment (compared with 4 % of all employment in the EU).  6 % (1 in 17) of employees in hotels and restaurants receive envelope wages (compared with 5 % of all employees in the EU).  Unregistered enterprises and formal enterprises under-declaring transactions and/or employing unregistered and under-employed workers, and the bogus self-employed, prevail across all sub-sectors of the tourism economy. These include: accommodation services, food and beverage serving activities; railway, road, water and air passenger transport; transport equipment rental; travel agencies and other reservation services; cultural activities, and sports and recreational activities. Tackling undeclared work in the tourism sector To tackle undeclared work in the tourism sector, not only are deterrence measures required to increase the costs of undeclared work (‘sticks’) and incentive measures to make declared work more beneficial and easier (‘carrots’) but also education and awareness raising initiatives. Deterrence measures that could be used include:  Workplace inspections, including announced inspections, and joint and concerted inspections to tackle cross-border undeclared work. Introducing ID cards can improve their effectiveness and experimenting with social partner involvement in inspections, akin to Iceland, is one way forward.  Data mining to identify risky tourist businesses (i.e., ‘outliers’) can use various indicators: higher than average expenses; higher ratios of credit card to cash payments; lower wage levels, and lower numbers of registered employees for turnover. Using dynamic benchmarking to identify ‘outlier’ tourist enterprises can further improve the effectiveness of data mining in detecting undeclared work.  Data mining can also better identify the targets for notification letters, as exemplified by Estonia and Spain, but also Canada where notification letters have encouraged the full declaration of tips by hospitality workers.  Introducing registration such as a written contract (by the first day of work) is a pre-requisite for effective detection. This, however, does not cover all forms of employment in tourism. Other forms of worker registration are therefore required, such as registration of service providers on online platforms.  Other deterrence initiatives to improve detection of undeclared work in the tourism sector include: the introduction of certified cash registers; and supply chain due diligence initiatives, such as a voluntary supply chain responsibility initiative, which larger tourism businesses could introduce as part of their corporate social responsibility (CSR) strategies. Incentive measures that could be used include:  Simplifying compliance to make it easier for employers and the self-employed, as well as workers, to operate on a declared basis. Initiatives could include: simplified regulations for smaller and seasonal jobs in tourism (exemplified by the 2010 Simplified Employment Act in Hungary); introducing threshold amounts for workers to earn from own-account activities (e.g., UK), such as to address private home restaurants and ‘meal sharing’; and using tax and social security incentives, exemplified by ‘flexi-jobs’ in the hotel and catering sector in Belgium.  Social partners can provide social security incentives to operate on a declared basis in the tourism industry. For example, the Builders Social House (Casa Socială a Constructorilor, CSC) scheme in Romania could be replicated in various tourism sub-sectors, where work is seasonal, and in other Member States.  Social partners can also offer other incentives, such as in Greece where an employer federation (ESEE) provides free marketing to compliant tourist businesses via ‘business walking routes’ pamphlets distributed to tourists. To do so, a ‘white list’ of compliant tourist businesses is a pre-requisite.  Participants in the undeclared economy could be offered the opportunity to voluntarily disclose their previous non-compliance. This could be targeted at many tourist industries (e.g., pop-up restaurants, home restaurants, short-term holiday rental sphere).  Initiatives to encourage tourists to purchase on a declared basis could be used, including: holiday vouchers to promote the use of registered tourist accommodation and reduce undeclared earnings in the accommodation sector; encouraging tourists to ask for receipts so that transactions are recorded by firstly, making it a statutory responsibility for restaurant menus to include on the front page that it is compulsory to issue a receipt and if not produced, the purchaser has the right not to pay, and secondly, by encouraging tourist participation in national receipt lotteries by hosting the ‘receipts lotto’ draw in different tourist resorts during vacation periods. Education and awareness raising initiatives include:  Developing education and awareness raising materials to elicit tourist behaviour change, exemplified by the Greek campaign ‘receipts please’ targeted at tourists, and the Portugal educational campaign to inform motorhome users of official motorhome sites.  Using campaign messages that overcome the neutralisation techniques (NTs) employers, workers and tourists use to rationalise their deviant behaviours.  Developing a social labelling initiative which provides compliant tourist enterprises (i.e., on a ‘white/compliance list’) with a social label that they respect fair working conditions, to help tourists make appropriate choices when purchasing goods and services.
... En la última década ha crecido la investigación aplicada en el campo del comportamiento y el cumplimiento tributario. Existe evidencia empírica que los recordatorios (cartas), mensajes disuasorios y las normas sociales y morales mejoran el cumplimiento de las obligaciones tributarias de individuos y empresas (Schwartz y Orleans 1967;Coleman 1996;Wenzel y Taylor 2004;Hasseldine et al 2007;Kleven et al 2011). ...
Technical Report
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Este documento contiene un análisis detallado del estado actual del sistema de pensiones peruano. El documento enumera y describe los retos principales que el sistema de pensiones enfrentará en los siguientes años así como distintos elementos de análisis para avanzar en una nueva generación de ajustes que: (i) considere el sistema pensional en su conjunto; (ii) incremente cobertura; (iii) mantenga un equilibrio entre contribuciones y beneficios; (iv) reduzca la inequidad; (v) proporcione subsidios apropiados, progresivos y sostenibles; y (vi) proporcione cobertura efectiva de riesgos (muerte, longevidad, volatilidad en tasas).
... Baralexis [26] found that the short, simple, and efficient inspection period in the tax audit procedure was a factor causing the high level of tax evasion in Greece. Giving a letter of inspection information from the tax officer to the taxpayer alone can influence the reported income proven in field experiments [37]; [38]; [39] where transparency leads the Personal Taxpayer to trust the tax authority more. ...
... An in-depth, semi-structured, key-informant online survey was used to collect primary data for the research. Hasseldine et al. (2007) argue that such a data collection method allows the researcher to gain an in-depth understanding of the research problem. The survey focused on individual income taxpayers in particular. ...
... The problem of cognitive overload is usually bypassed through the simplification of the communication language, the introduction of visual stimuli or provision of information how to file the income (De Neve et al. 2019, Eerola et al. 2019). This sub-category of non-deterrence nudges also include communications which introduce various types of informational content, such as a sentence on tax deductible donations (Biddle et al. 2018), phone number for enhanced consumer service (Coleman 1996), a statement of intent by tax administration to help during the filing process (Hasseldine et al. 2007), and the like. In the analysis that follows, we group all these nudges under the common umbrella name Other Non-Deterrence nudges. ...
Preprint
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Taxpayer nudges—behavioral interventions that aim to increase tax compliance without changing the underlying economic incentives of taxpayers—are used increasingly by governments because of their potential cost-effectiveness in raising tax revenue. We collect about a thousand treatment effect estimates from over 40 randomized controlled trials, and in a meta-analytical framework show that non-deterrence nudges—interventions pointing to elements of individual tax morale—are on average ineffective in curbing tax evasion, while deterrence nudges—interventions emphasizing traditional determinants of compliance such as audit probabilities and penalty rates—are potent catalysts of compliance. These effects are, however, fairly small in magnitude. Deterrence nudges increase the probability of compliance by only 1.5-2.5 percentage points more than non-deterrence nudges, while the effects are likely to be bound to the short-run, and are somewhat inflated by selective reporting of results.
... For individual taxpayers, Slemrod et al. (2001) and Kleven et al. (2011) find that audit threat letters increase reported income. For business taxpayers, Hasseldine et al. (2007) , Ortega and Sanguinetti (2013) and Harju et al. (2014) also find evidence that an increased threat of audit increases reported income. In Australia, Wenzel (2006) finds that reminder letters sent to business taxpayers who had not filed their tax declaration on-time increased compliance, with larger effects on compliance evident if the reminder letter included text assuring taxpayers they were not suspected of being dishonest and expressed understanding. ...
Article
This paper provides empirical evidence on the implications of the timing of reminders by studying the effect of varying the timing of reminder letters to taxpayers on their payment behavior. The collection of unpaid tax debts constitutes a considerable challenge for tax authorities. We discuss potential mechanisms through which reminders may affect taxpayers’ behavior and study the payment behavior of business taxpayers in a field experiment in Australia. We find that a simple reminder letter increases the probability of payment by about 25 percentage points relative to a control group that does not receive a letter from the tax authority. However, variation over a three-week period in the timing of the reminder letter has no effect on the probability of payment within seven weeks of the due date. Our findings indicate that sending reminders early results in faster payment of debts with no effect on the ultimate probability of payment.
... This article also contributes to the growing literature about the design of an effective behavioral social policy. Past studies have examined the effectiveness of providing information on promoting healthy eating (Mathios, 2000;Swartz et al., 2011), integration of social norms (Johannessen and Glider, 2003;John et al., 2014), legal compliance (Blumenthal et al., 2001;Fellner et al., 2013;Hasseldine et al., 2007), energy conservation (Allcott, 2011;Costa & Kahn, 2013) and prosocial behaviors (Frey and Meier, 2004), among others. A key objective of energy market policy has been to increase benefits flowing to consumers who are particularly vulnerable, such as high energy consumers or those on low incomes (Thwaites et al., 2017). ...
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We conduct an online randomized controlled experiment in Australia in order to examine whether government initiatives to encourage the use of energy comparison sites increase consumer search and result in lower prices. Despite significant price variations across energy retailers, our experiment indicates that while providing information about the potential gains from using the government-owned Victoria Energy Compare (VEC) website encourages participants to visit the website, it is not effective in inducing them to contact, or switch, retailers who are providing better offers. Moreover, low-income individuals who visited the VEC website due to the availability of a $50 bonus are less likely to contact retailers for a better deal in order to switch retailers, and end up paying a higher cost of per unit kWh electricity and spending more on total electricity expenditure. Our findings imply that promoting government-initiated comparison sites is not sufficient to increase competition and that providing consumers with financial incentives for using these sites in order to encourage competition and improve outcomes of the energy poor may potentially backfire.
... (last accessed 6 June 2017). Hasseldine, J., Hite, P. James, S. andToumi, M. (2007). Persuasive communications: tax compliance enforcement strategies for sole proprietors. ...
Technical Report
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Key findings:  Effective preventative approaches are long-term, tailored strategies. Over time, they can trigger behavioural change to declare work and increase trust in institutions. Preventative strategies should combine a range of measures and must be regularly tested, evaluated and adapted according to the results. Pilot schemes can be used to find effective ways to tailor approaches to the national context and culture. However, preventative approaches and deterrence approaches are complementary. Both can be used to tackle undeclared work.  Moving towards preventative measures requires a change of strategy of the role of enforcement institutions. A preventative approach requires support of all relevant institutional and civil society stakeholders ¬- a strong partnership should be based on a shared vision and operational strategy. This can involve introducing key performance indicators (KPIs) to assess, for instance, the number of legitimised labour relations; overcoming internal resistance; and reviewing staff competencies and skills.  When carefully designed, preventative approaches can be cost effective and relatively straight-forward to implement. Examples from the seminar such as using notification letters to ‘nudge’ behaviour towards compliance have shown positive results in transforming undeclared work into declared work through cost effective means - they require few resources and make use of existing information on non-compliant individuals or businesses. Other examples used in broader labour legitimising policy efforts, such as providing tax rebates for using declared work, can be costly in the short term but can have longer-term benefits including an increase in tax receipts through a positive impact on attitudes to tax morality.  Notification letters should be targeted, tailored and make it easy to comply. Results should be publicised. The recipients of notification letters can be identified through data mining, analysis and matching, combined with risk assessment. Examples presented by Estonia, Greece, Lithuania and Spain indicated a range of effective methods when designing the content of notification letters. These included experimenting with the ‘severity’ of language used, ensuring easy-to-follow instructions, personalising the letter to the recipient and locality, and reinforcing examples about the positive compliant behaviour of others (e.g. ‘9 out of 10 businesses in your area pay their tax on time’). Severity in language ranged from reminding the recipient about the risks and impact of non-compliance, to detailing personal impacts such as their increased risk of sanctions, inspections and the consequences of being caught. To maximise impact, the outcomes could be publicly communicated, follow-up visits arranged, and support and advice offered.  Tax rebates can be effective but should be easy to claim and carefully calibrated to ensure a positive cost-return ratio. Tax rebates are mostly used in sectors where cash is commonly used, including household work, nursing and care work. As such they also have wider benefits such as stimulating economic growth in targeted sectors and supporting families. Examples from Denmark, Finland and Sweden showed that while complex to initiate (due to regulatory systems, and requiring long-term political and public support which is not always easy to obtain), there is mostly a positive response to such schemes. However, to ensure cost effectiveness, tax rebates should calculate that the level of the tax reduction is sufficient to outweigh the benefits of sourcing from the undeclared economy over the long-term. Piloting these actions in sectors where undeclared work is prevalent can be a good first step. Other learning from these examples showed that the claim procedure should be as simple as possible, it should be widely accessible, the risk of abuse should be anticipated and mitigated, and the administration should take place through a single agency with dedicated staff.
... Hence if the expected penalty is high when caught, the smaller the temptation into shadow economy will be (Virta, 2010). Similarly, it is established that the antecedents of tax evasion will surely have effect on shadow economies, therefore extant studies found that the penalty is negatively related with tax evasion (Alkhatib et al., 2018;Allingham and Sandmo, 1972;Chau and Leung, 2009;Feld and Frey, 2006;Hasseldine et al., 2007). ...
Article
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A complex and great challenge cutting across almost all types of economies from developed to developing economies is the phenomena of shadow economies. A number of factors are responsible for peoples' involvement in such practices of shadow economies around the world. One of such factor is government policies especially those concerning taxation and regulation. Shadow economy practices such as tax evasion, results in the loss of tax revenues for the government and consequently affect government performance. The implications of loses in tax revenue is the incapacitation of the government's ability to finance projects essential for economic growth and societal welfare. The current study revealed two major variables that can possibly influence the shadow economy level. The variables are: firstly, the probability of detection and secondly, the penalty rate. The present study therefore builds on the existing body of knowledge on taxes from a deterrence perspective. Since shadow economy is subject to individuals, this suggests that deterrence factors should be given priority, compared to other factors. The proposed framework, from a deterrence perspective, would benefit tax administrators in comprehending and mitigating the phenomenon of a shadow economy.
... For instance, it is not clear how audits and fines may increase trust in the tax system instead of decreasing it. Insights into these mechanisms could fortify our understanding of contradictory results from studies that have shown a positive effect (Hasseldine et al. 2007), no effect (Ariel 2012), or even negative effects of audits and fines Slemrod, Blumenthal, and Christian 2001). ...
Article
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Tax authorities utilize a wide range of instruments to motivate honest taxpaying ranging from strict audits to fair procedures or personalized support, differing from country to country. However, little is known about how these different instruments and taxpayers' trust influence the generation of interaction climates between tax authorities and taxpayers, motivations to comply, and particularly, tax compliance. The present research examines the extended slippery slope framework (eSSF), which distinguishes tax authorities' instruments into different qualities of power of authority (coercive and legitimate) and trust in authorities (reason-based and implicit), to shed light on the effect of differences between power and trust. We test eSSF assumptions with survey data from taxpayers from three culturally different countries (N = 700) who also vary concerning their perceptions of power, trust, interaction climates, and tax motivations. Results support assumptions of the eSSF. Across all countries, the relation of coercive power and tax compliance was mediated by implicit trust. The connection from legitimate power to tax compliance is partially mediated by reason-based trust. The relationship between implicit trust and tax compliance is mediated by a confidence climate and committed cooperation. Theoretical and practical implications are discussed.
... Previous trials have tested the effectiveness of providing information via different methods, to promote different outcomes. These include using posters to promote exercise (Slaunwhite et al., 2009); labelling products to encourage healthy eating (Mathios, 2000;Swartz et al., 2011) or energy-efficient purchases (Kallbekken et al., 2013;Newell and Siikamäki, 2014); and sending text messages, emails (Cadena and Schoar, 2011;Haynes et al., 2012) or letters (Bhargava and Manoli, 2015;Blumenthal et al., 2001;Fellner et al., 2011;Hasseldine et al., 2007) to increase tax compliance or reduce energy consumption (Allcott, 2011). A range of trials have tested the integration of social norms in providing information (see Cialdini, 2001;Johannessen and Glider, 2003;John et al., 2014), or tested whether certain messengers are more effective in changing behaviour (Cialdini, 2007;Durantini et al., 2016). ...
Article
Many British energy customers pay more than they need to for their household energy, and a lack of engagement is now a recognised policy challenge. Around 60% of British energy customers are on a Standard Variable Tariff (SVT), a ‘default’ tariff which costs on average about £300 more per year than the cheapest market alternative. This paper presents results of a large-scale randomised controlled trial (RCT) which aimed to increase consumer engagement in the energy market. We tested the effect of sending a “Cheaper Market Offers Letter” (CMOL) to nearly 140,000 disengaged energy customers drawn from two energy suppliers. The CMOL was highly personalised, highlighting the amount a customer could save by switching and featuring details of the three cheapest tariffs on the market available to them. We measured the effect of the letters on switching (our primary outcome) and quality of switch (our secondary outcome, measured by estimated savings). After one month, we find that CMOLs significantly increase switching – from 1.0% to 3.4% in the most effective arm – and increase savings amongst those who switch by an estimated £50 per year. We conclude by discussing the results and implications for future research.
... For instance, it is not clear how audits and fines may increase trust in the tax system instead of decreasing it. Insights into these mechanisms could fortify our understanding of contradictory results from studies that have shown a positive effect (Hasseldine et al. 2007), no effect (Ariel 2012), or even negative effects of audits and fines Slemrod, Blumenthal, and Christian 2001). ...
Article
Full-text available
Tax authorities utilize a wide range of instruments to motivate honest taxpaying ranging from strict audits to fair procedures or personalized support, differing from country to country. However, little is known about how these different instruments and taxpayers’ trust influence the generation of interaction climates between tax authorities and taxpayers, motivations to comply, and particularly, tax compliance. The present research examines the extended slippery slope framework (eSSF), which distinguishes tax authorities’ instruments into different qualities of power of authority (coercive and legitimate) and trust in authorities (reason-based and implicit), to shed light on the effect of differences between power and trust. We test eSSF assumptions with survey data from taxpayers from three culturally different countries (N = 700) who also vary concerning their perceptions of power, trust, interaction climates, and tax motivations. Results support assumptions of the eSSF. Across all countries, the relation of coercive power and tax compliance was mediated by implicit trust. The connection from legitimate power to tax compliance is partially mediated by reason-based trust. The relationship between implicit trust and tax compliance is mediated by a confidence climate and committed cooperation. Theoretical and practical implications are discussed.
... An in-depth, semi-structured, key-informant online survey was used to collect primary data for the research. Hasseldine et al. (2007) argue that such a data collection method allows the researcher to gain an in-depth understanding of the research problem. The survey focused on individual income taxpayers in particular. ...
... Tax compliance is legally sanctioned, and the communication of the likelihood of enforcement is more likely to be successful than messages with normative content (Blumenthal, Christian, Slemrod, & Smith, 2001;Coleman, 1996;Iyer, Reckers, & Sanders, 2010;Mieselman;Bergolo, Ceni, Cruces, Giaccobasso, & Perez-Truglia, 2017). For example, communicating the likelihood of audit has been shown to work in both field randomized controlled trials (Kleven, Knudsen, Kreiner, Pedersen, & Saez, 2011;, Kettle et al., 2016Hasseldine, Hite, James, & Toumi, 2007) and laboratory experiments (Spicer & Thomas, 1982). ...
Article
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There has been a surge of basic and applied interest in exploring how small changes in decision contexts might be used to improve heuristic decision-making, “nudging” decision-makers toward choices that increase individual and social utility. The present study tested the impact of three types of nudges on tax compliance among delinquent businesses (n=3,130) in the state of Pennsylvania: (1) sending reminder letters that almost identically matched original tax delinquency notices, (2) sending redesigned reminder letters that simplified text and layout, increased the salience of critical information, and included an “Act Now” urgency statement, and (3) sending redesigned reminder letters with handwritten notes on the envelope. Redesigned reminder letters significantly increased the number of business owners who responded and the amount of delinquency paid within 15 days of receiving the notices. The addition of a handwritten note on the outside of the envelope did not additionally increase response rates or payment amount. Although the effect sizes observed in this study were small, the potential impact is large given the number of delinquent businesses and the average amount of taxes owed in Pennsylvania.
... The first category is general service levels (Miskam et al., 2013;Williams et al., 2016). The second category is in the form of cooperation, information, and socialization conducted by the tax offices to help the taxpayers fulfill their obligations (Alm et al., 2017;Hasseldine et al., 2007;Lefebvre et al., 2015;Murphy & Helmer, 2013). The third category is related to the taxation system (Khlif et al., 2016;Marriott et al., 2013). ...
Article
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The purpose of this research is to present the results of meta-analysis on the relationship between the determinant factors against tax evasion based on service and trust paradigm. This research synthesized 102 results of 33 individual articles within a period of 1978-2017. There is a robust conclusion that the improving service quality and increasing public trust are two effective instruments in fighting against the tax evasion. As implied in the Social Contract Theory, the effect of service quality in decreasing the tax evasion is greater than that of public trust level. Considering the national culture as one potential moderating variable,
... Other studies carried by Grasmick and Scott (1982) also indicate that respondents admitting some form of tax noncompliance are less likely if such acts would result in severe penalties. The experimental studies conducted by Hasseldine et al. (2007) also show that severity of sanctions has significant effects on tax compliance behavior. ...
... † Their work is vital not only for the everyday functioning of tax systems, but also in identifying limitations in the existing tax systems, conceptualizing potential solutions, and helping convert governments' tax reform visions into reality. The tax practitioners have been documented in extant literature to have a significant influence on the tax compliance behavior of their clients (Garcia et al., 2020;Hasseldine, Hite, James & Toumi, 2007). Even though it has been well established in the extant literature that the tax compliance behavior of the tax practitioners is influenced by their individual traits and beliefs, little is known on how these tax practitioners behave when preparing their personal tax returns. ...
Article
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Tax revenue is a key source of income for most countries in the world. To maximize tax revenue, it is critical that taxpayers comply with relevant tax laws particularly in a self-assessment filing system. Alas, many countries are still grappling with tax evasion or even tax avoidance issue. A key challenge is tax compliance behavior remains a complex and perplexing topic. While a lack of tax knowledge is pertinently attributable to unintentional non-compliance, the causes of intentional non-compliance are far from clear. This study aims to investigate the factors associated with intentional tax non-compliance by ruling out the variation in tax knowledge explanation. In so doing, this study employs a sample of respondents deemed conversant with tax knowledge. More specifically, this study surveys 104 tax practitioners in Malaysia using a convenience sampling technique and utilizes the theories of planned behavior and free trait to explore how they behave when filing their personal tax returns. The findings suggest only subjective norms is significantly linked to their tax compliance behavior. This study extends the literature on the role of individual factors on tax compliance behaviour among tax practitioners acting in a different persona.
... Notification letters are postal or email communications from enforcement agencies to companies or workers, giving information on applicable legal obligations and systems of control in place. Although these have been widely applied in tax compliance (Beeby, 2017;Hasseldine et al., 2007), notification letters have also recently been used by labour inspectorates (see Williams, 2019b). ...
Article
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... Notification letters are postal or email communications from enforcement agencies to companies or workers, giving information on applicable legal obligations and systems of control in place. Although these have been widely applied in tax compliance (Beeby, 2017;Hasseldine et al., 2007), notification letters have also recently been used by labour inspectorates (see Williams, 2019b). ...
Book
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The aim of this report is to evaluate “e-formalization” in European countries. To tackle informality, the lockdown and physical distancing measures resulting from the COVID-19 pandemic has resulted in a decrease in onsite workplace inspections in Europe and the greater use of e-initiatives as a complement to the traditional onsite workplace inspection. Therefore, the COVID-19 pandemic has made e-formalization more relevant and pertinent, accelerating the trend towards the use of innovative, information-intensive and connectivity based e-initiatives for tackling the informal economy.
... Although Blumenthal et al. (2001), examining experience in the US state of Minnesota, reveal that normative appeals affected only some groups of taxpayers, and Chung and Trivedi (2003) find that friendly persuasion is effective, it depends on the nature of the appeal made. Hasseldine et al. (2007) examine 7,300 sole proprietors in the UK. Comparing the effect of five different letters ranging from a simple offer of assistance to a letter advising that his/her tax return had been preselected for audit, they find that tax compliance appeals resulted in greater compliance, particularly among those who do not use a paid preparer. ...
... Notification letters are postal or email communications from enforcement agencies to companies or workers, giving information on applicable legal obligations and systems of control in place. Although these have been widely applied in tax compliance (Beeby, 2017;Hasseldine et al., 2007), notification letters have also recently been used by labour inspectorates (see Williams, 2019). ...
Article
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Wage under-reporting (or under-declared employment) occurs when a formal employer pays a formal employee an official declared wage but also an additional undeclared (“envelope”) wage. Given that employers often give this undeclared part of the wage to the employee as cash in an envelope, the study of wage under-reporting is commonly referred to as the study of “envelope wage” practices. To tackle wage under-reporting, two contrasting policy approaches are available to governments and social partners. A “direct” controls approach ensures that the costs of engaging in wage under-reporting outweigh the benefits, either by increasing the penalties and risks of detection, or by improving the ease and benefits of full declaration. An “indirect” controls approach, meanwhile, asserts that wage under-reporting occurs when the norms, values and beliefs of employees and employers are not in symmetry with the laws and regulations. Here, therefore, policy measures seek to align the norms, values and beliefs of employees and employers with the laws and regulations. This is done either by changing norms, values and beliefs using education and awareness raising campaigns or by modernising formal institutions to improve trust in government. Here, the policy initiatives are identified for tackling each determinant of wage under-reporting by: (i) explaining why it is important to focus on the determinant and its potential impact on preventing envelope wages; (ii) reporting “best practices” in fighting this determinant of envelope wages in other countries and (iii) making preliminary suggestions what can be done in Latvia to address this issue in addition to initiatives already initiated
... Notification letters are postal or email communications from enforcement agencies to companies or workers, giving information on applicable legal obligations and systems of control in place. Although these have been widely applied in tax compliance (Beeby, 2017;Hasseldine et al., 2007), notification letters have also recently been used by labour inspectorates (see Williams, 2019). ...
Technical Report
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Wage under-reporting (or under-declared employment) occurs when a formal employer pays a formal employee an official declared wage but also an additional undeclared (“envelope”) wage. Given that employers often give this undeclared part of the wage to the employee as cash in an envelope, the study of wage under-reporting is commonly referred to as the study of “envelope wage” practices. To tackle wage under-reporting, two contrasting policy approaches are available to governments and social partners. A “direct” controls approach ensures that the costs of engaging in wage under-reporting outweigh the benefits, either by increasing the penalties and risks of detection, or by improving the ease and benefits of full declaration. An “indirect” controls approach, meanwhile, asserts that wage under-reporting occurs when the norms, values and beliefs of employees and employers are not in symmetry with the laws and regulations. Here, therefore, policy measures seek to align the norms, values and beliefs of employees and employers with the laws and regulations. This is done either by changing norms, values and beliefs using education and awareness raising campaigns or by modernising formal institutions to improve trust in government. Here, the policy initiatives are identified for tackling each determinant of wage under-reporting by: (i) explaining why it is important to focus on the determinant and its potential impact on preventing envelope wages; (ii) reporting “best practices” in fighting this determinant of envelope wages in other countries and (iii) making preliminary suggestions what can be done in Latvia to address this issue in addition to initiatives already initiated.
... Framing manipulations are used to present an option that highlight either positive or negative aspects that ultimately impact the attractiveness of the option (Tversky & Kahneman, 1981). Framing strategies have been used as nudges in numerous different studies involving healthcare (O'Connor, 1989), tax compliance (Hasseldine, Hite, James & Toumi, 2007) and work performance (Hossain & List, 2012). Using framing strategies could improve the dissemination of suicide prevention information, as engagement rates with routinely distributed online suicide prevention resources have been low (King et al., 2015). ...
Article
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Three commonly used behavioral economic strategies were tested to investigate their utility in suicide prevention and mental health initiatives. Study 1 used a social norms nudge to potentially increase the people who accessed an online suicide risk factor intervention via e-mail (N = 14,792). E-mails containing the social norm nudge were 164% more likely to click on the link relative to those who received the e-mail without the nudge. Study 2 used item count technique to better estimate suicidal ideation compared with direct questioning methods endorsed by two groups of online participants (N = 787). No difference between groups was found. Study 3 used framing techniques to understand if participants (N = 787) were more likely to access online coping skills when framed as being able to help others who may go through a suicidal crisis rather than themselves. Findings indicated more participants accessed the coping skills when framed as having utility for helping other people going through a suicidal crisis.
... Andreas and Savitri (2015) argues that a clear understanding of tax regulations by taxpayers and the quality of service that taxpayers receive have an influence on taxpayer compliance. Hasseldine, Hite, James, and Toumi (2007) also found that persuasive communication from tax units will provide clarity to taxpayers regarding their tax obligations. This policy will contribute to improving tax compliance by taxpayers. ...
... The participants in the friendly persuasion groups report higher earnings than the control group. Hasseldine et al. (2007), meanwhile, examined 7,300 sole proprietors in the UK. Comparing the effect of five different letters ranging from a simple offer of assistance to a letter advising that his/her tax return had been already pre-selected for audit, they find that tax compliance appeals resulted in greater compliance, particularly among those who do not use a paid preparer such as an accountant to prepare their self-assessment tax return. ...
... The first mechanism is based on the idea of disincentives (sanctions and penalties) to prevent socially legitimate but illegal activities, for example by communicating and improving the likelihood of detection through inspection (e.g. Hasseldine et al., 2007). However, such an approach can be counterproductive as it can undermine respect for the fairness of the system and thus reduce voluntary compliance leading to greater engagement in the informal economy (Murphy, 2005). ...
Article
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OPEN ACCESS Purpose-Although the coronavirus (COVID-19) pandemic appears to disproportionately affect those in informal employment, they often receive less government support than the formally employed. This paper considers definitions of the informal economy and informal employment, explores the rationale for participating in the informal economy and reflects on some effects of the pandemic on these workers. Design/methodology/approach-The paper presents a narrative literature review with analysis of the selected academic and policy literature. Findings-There are considerable short-and long-term implications of the pandemic for informal employment and the informal economy. This occurs against the background of unresolved tensions arising from informal workers' desire for more employment security and employers' striving for continued labour flexibility while transferring costs to government and workers. The COVID-19 pandemic might accelerate current trends and force new solutions to better protect basic work security while helping organisations to remain competitive. Government policies supporting work safety, income security, moves to formalisation of employment and fairness for informal employees are particularly important. Research limitations/implications-As statistical and qualitative evidence is currently limited, it is too early to identify the full effects of COVID-19 on employment in the informal economy. Practical implications-The results suggest that governments need to carefully consider explicit support for those in informal employment to create fair, resilient and ethical structures for workers, businesses, economies and wider societies. Social implications-The paper identifies some of the social implications of COVID-19 for the informal sector. Originality/value-The analysis offers initial insights into the impacts of a major health, economic and social shock on informal working.
... For example, Slemrod, et al (2001), find that increased perceptions of audit increased reported income, in the U.S., for lower and middle income tax payers who in general had higher opportunities to evade on self-reported income, rents, and royalties. Hasseldine et al (2007), show that deterrence letters improved compliance for sole proprietors in the UK who had reported income below a threshold for two consecutive years, and in particular for self prepared returns. Kleven et al (2011), show that income tax compliance differed based on the individual's past audit experience and increased with increasing probability of audit in Denmark. ...
Article
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In recent years, tax authorities around the world have started using behavioral insights to encourage taxpayers to fulfill their obligations. We review and discuss some of the recent empirical literature on tax compliance. In line with recent trends, we report on a field experiment in collaboration with the tax authority of Latvia (SRS) to encourage previously non-compliant individuals, who also have own business income, to submit their tax declarations on time in 2017. These individuals were pre-emptively sent emails with behaviorally informed messages, in order to reach and influence an important target population, at a salient moment. Our results indicate that all the behaviorally informed messages increased submission by the submission deadline, compared to a control group. The best performer was a message that specifically framed noncompliant behavior as a deliberate choice, which increased timely submission by 9.4% (4.1 percentage points; p=0.05).
Article
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Since the mid-2000s, the fear of "homegrown" terrorism in most developed democracies has prodded police to partner with local Muslim communities as a proactive and preventive approach to Islamic extremism. However, despite practical variations, this model of counterterrorism community policing ("CTCP") has faced a comparable challenge-the lack of legal and moral legitimacy within counterterrorism law enforcement which erodes Muslim communities' trust and confidence in policing. Drawing on common critiques of CTCP in the U.S., the U.K. and Australia, this article aims to proffer a behavioral-economics view to promote intended goals of CTCP. Borrowing the ideas of Nudge Theory, my discussion suggests that community engagement within CTCP could be stimulated more effectively through a subtle process of trust building whereby residents are coaxed toward cooperation through indirect encouragement, assistance and facilitation. Through a case study of CTCP in Muslim communities, it is argued that nudge entails the refrainment of the political and media narrative from conflating Islamist ideology with the prime source of domestic terrorist danger. At the grassroots level, the nudge-oriented CTCP is contingent upon community representatives taking on a more active and forefront role in CTCP with police reducing their visibility to only facilitate in the background.
Article
Very little is known about the compliance behavior of first-time taxpayers although their tax paying habits may affect the long-run functioning of a tax system. This paper studies the compliance behavior of new entrants to the tax system using data from a large-scale natural field experiment that was implemented in collaboration with the Australian Taxation Office (ATO). We examine the effectiveness of a welcome letter from the tax authority that aims to nudge first-time taxpayers to lodge their first income tax return. We compare this letter to a standard letter that emphasizes the possibility of penalties and interest charges. We find that both letters have surprisingly similar effects on tax compliance, suggesting that the main channel through which the letters affect individual behavior is by providing information. By contrast, the type of messaging and the way in which information is presented to first-time taxpayers appear to be relatively unimportant. Our analysis of heterogeneous treatment effects indicates that both letters are most effective for young entrants to the tax system and, within this group, more effective for Australian citizens than for visa holders.
Article
The aim of this research is to test about taxpayer’s perception of freelance of tax rate and penalty rate toward tax evasion. The dependent variable in the study was perception of tax evasion. The independent variable research were perception of tax rate and penalty rate. Population in this research is freelance taxpayers who have taxpayment card. The amount of sample used is 100 respondens collected with accidental sampling. Data program using SPSS (Statistical Product and Service Solution) version 18. Analysis method used in this research is multiple linear regression, determination coefficients (R2), and differential test of t-test. The research results showing that tax rate variable has the positive significant influence to tax evasion. Penalty rate has the negative significant influence to tax evasion.
Technical Report
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In many economies, a fragmented and uncoordinated approach exists across the multifarious government bodies responsible for tackling undeclared work and limited integration of social partners, as well as an incomplete range of policy measures used. The aim of this toolkit is to set out the steps required to develop a holistic integrated strategic approach towards undeclared work. The aim of this toolkit is to set out the steps required to make progress towards a holistic integrated strategic approach towards undeclared work. To addresses the three components, the next section analyses the issues involved in adopting the strategic objective of transforming undeclared work into declared work. Developing a whole government coordinated approach is then examined. Section 3 addresses how economies can develop a cross-government coordinated strategy towards undeclared work, section 4 the coordinating of operations, section 5 cross-government cooperation on data mining, sharing and analysis and section 6 the greater involvement of social partners. Attention then turns towards the third and final component of adopting the full range of policy measures available to transform undeclared work into declared work. Section 7 sets out the full range of policy measures available, section 8 discusses implementing more effective sanctions, section 9 improving the risk of detection, section 10 improving the ease and benefits of engaging in declared work, section 11 implementing education and awareness raising campaigns, and section 12 modernising enforcement authorities.
Thesis
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These essays provide arguments and evidence as to circumstances that encourage or hinder cooperation. Chapter 1 theoretically argues that incentives to participation in a cooperative environment can increase participation, but disrupt cooperation itself. Following B´enabou and Tirole’s (2003) crowding-out theory, I propose a model where cooperation is strategically complementary and principals face a trade off between pay and cooperativeness of agents. If such trade off is anticipated by agents, this can lead to multiple equilibria where the informative power of incentives disrupts cooperation. Chapter 2 presents results from a randomised controlled trial in Poland which used reminder letters to promote voluntary compliance among 150,122 taxpayers who declared their Personal Income Tax but had failed to pay by the deadline. Taxpayers were randomly allocated to receive the letter originally used by the authorities or one of nine letters adapted using behavioural design. Among other results, we find that, relative to a control “behavioural” letter, there is a significant negative effect of a “social norm” message informing of the high frequency of compliant taxpayers. There is also a significant negative effect of a “public goods” messages that appeals to cooperation on the taxpayers’ side by reminding them of the role of taxes to support the services provided by the government. In this context, therefore, we do not find evidence of reciprocity or conditional cooperation. Chapter 3 presents results from a lab-in-the-field experiment conducted at the LSE in 2017. Experimental subjects are asked to take part in a two-person team task for an LGBTI charity. The production function exhibits perfect complementarities in individual levels of effort. Subjects are asked to decide whether they want to volunteer their compensation, are then randomly assigned a partner and informed whether their partner volunteereed. I find that being matched with a volunteer increases effort among those attending, in particular those who have reported more interest in working for the cause. Charities are thus particularly affected by the composition of their teams in terms of career choice and motivation.
Article
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Tax revenue is a vital source of revenue for various governments around the world. Yemen needs improvement inits tax system so as to guarantee stability in the flow of revenue for the purpose and need to finance development. Increase in tax compliance among Small and Medium Enterprise (SMEs) is of utmost importance in this respect. Thus,this is a pilot study which aims to examine the content validity and reliability of the item's pools of the constructs under investigation. Hence, the paper analyses a small aggregate of a sample data in respect of the effect of, tax fairness, peer influence, perception of corruption, tax audit, tax rate, tax penalty and tax compliance costs of SMEs in Yemen on their tax compliance behavior. This study utilized a questionnaire survey in obtaining the required data as well as subjecting the questionnaire at the initial within the realm of content and face validity. The utilizable questionnaires gathered were then analysed for reliability with the application and the deployment of statistical software, the SPSS version 25. The outcome shows that the instruments are valid as well as reliable. Furthermore, the data after the study demonstrates evidence of sufficient constancy. The result has an implication to the existing body of knowledge; other researchers can explore the measurements in different sectors and context around the globe.
Article
SYNOPSIS We predict taxpayers who use tax software developed by tax authorities will be more compliant than those who use commercial tax software. Experiment 1 indicates that taxpayers who are shown by prior literature to be aggressive (those in a tax-due position) report less aggressively when they utilize tax software developed by the taxing authorities, compared to a commercial software package. Using tax software developed by tax authorities minimizes the difference in aggressiveness between taxpayers in a tax-due position and those in a refund position, mitigating the effects found in prior research. Results from Experiment 2 suggest that the identity of the software developer is key; placement of a tax authority logo on commercial software does not create the same effect. Experiment 2 also provides evidence that taxpayers assume a greater detection risk when using authority-developed software, accounting for some change in behavior. The results of this paper have implications for researchers, taxpayers, and policy makers.
Article
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La pandemia del COVID-19 parece perjudicar de manera desigual a las personas con empleo informal, que con menos frecuencia reciben ayuda del gobierno que las personas con empleo formal. El propósito de este ensayo es realizar un análisis reflexivo sobre empleo en la economía informal en tiempos de pandemia provocada por el COVID 19. La metodología se basa en una investigación documental, en el que se tomaron en consideración diversas fuentes documentales como artículos publicados en revistas científicas e informes de organismos internacionales, con el fin de documentar el problema; entre los principales autores para el desarrollo documental se tienen Williams y Horodnic (2016a, 2016b), ILO (2014), ILO (2015) y Webb et al., (2020). La pandemia tiene efectos importantes a corto y largo plazo para el empleo informal y la economía informal. La pandemia del COVID-19 podría apresurar las tendencias actuales y obligar nuevas soluciones para preservar la seguridad básica del trabajo mientras ayuda a las organizaciones a seguir siendo competitivas. Las políticas gubernamentales que promueven la seguridad laboral de los ingresos, los movimientos hacia la formalización del empleo y la equidad para los empleados informales son peculiarmente considerables. Los resultados proponen que los gobiernos deben tener en cuenta atentamente el apoyo claro a quienes tienen empleos informales para crear estructuras justas, resilientes y éticas para los trabajadores, las industrias, las economías y sociedad en general. Como conclusiones se tiene que la reingeniería de la economía pos pandemia puede conducir a una reconsideración de las prácticas de empleo ampliamente utilizadas que tienden a reducir las condiciones de los trabajadores y la protección de la salud, a fin de obtener una ventaja competitiva.
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This study investigates the determinants of tax administration efficiency in Nigeria. The Nigerian tax system is faced with challenges, such as loss of revenue through high level of tax defaulters from both the legislative arm of the government and public institutions, corruption and financial irregularities and limited government administrative capability. Therefore, current study examines the influence of autonomy of the State Board of Internal Revenue (SBIR), use of information and communications technology, public enlightenment, strong auditing practice, motivation and incentives and perceived corruption on tax administration efficiency in Nigeria. A total of 124 questionnaires were collected out of 144 questionnaires that were administered. The study revealed that there is a significant positive relationship between tax administration efficiency and: autonomy of board of internal revenue, information and communications technology and public enlightenment. However, findings from the study revealed that there is insignificant relationship between tax administration efficiency and strong audit practice and motivation and incentives and perceived corruption. Based on the findings above, the study recommended that government should put an effective measure in place to collect taxes from tax defaulters across the different groups of the economy.
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Can research findings change political leaders’ beliefs and policies? We use experiments with 2,150 Brazilian municipalities to measure mayors’ demand for and response to research information. In one experiment, we find that mayors are willing to pay to learn the results of evaluation studies, and update their beliefs when informed of the findings. They value larger-sample studies more, while not distinguishing between studies in rich and poor countries. In a second experiment, we find that informing mayors about research on a simple and effective policy, taxpayer reminder letters, increases the probability the policy is implemented by 10 percentage points. (JEL D72, D78, D83, O17, O18)
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As a result of the ILO South-South and Triangular Cooperation knowledge-sharing project on an Integrated Approach Towards Formalization in Tajikistan, Kyrgyzstan, Azerbaijan and Uzbekistan, the report sets out road maps for the four countries to make progress towards an integrated strategic approach to facilitate the transition to formality. The study includes an assessment of the informal economy in each country and proposes a whole government coordinated approach to formalize the informal economy, highlighting South-South and Triangular Cooperation as an instrumental tool to accomplish this objective.
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Tax non-compliance is a unique problem as it does not only depend on the economic consequences but also the result of the combination of factors such as psychological, sociological, ethics, enforcement, tax administration, and demographics. Various strategies have been introduced by the Inland Revenue Board of Malaysia (IRBM) to combat non-compliance problems in Malaysia such as taxpayer's education, programs to increase tax awareness, tax audit, and tax investigation. Hence, in this study, we have developed a new model to predict the intention to comply among sole proprietors in Malaysia. The model is based on the Theory of Planned behaviour associated with the Expected Utility Theory and Deterrence Theory. The potential factors that influence the intention to comply with tax laws such as attitude towards the intention to comply, audit factors that consist of penalty rates and the probability of being audited, opportunity and subjective norms are studied. The mediating effect of information dissemination is also examined in this study. Non-audited taxpayers are chosen as a sample to measure voluntary compliance instead of enforced compliance. This research had adopted a quantitative method of data gathering by way of a questionnaire. Voluntary compliance is the key to a successful tax administration. Thus, it is very critical for IRB to determine the factors that can influence the intention to comply voluntarily with tax laws.
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Webley, P., H.S.J. Robben, H. Elffers & D.J. Hessing (1991) Tax evasion: an experimental appro¬ach, Cambridge:
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In the late 1990s, the Australian Taxation Office (ATO) underwent a series of reforms that set the stage for a new proactive role in building a voluntary taxpaying culture. The evaluation of these measures is being undertaken rather more systematically than reforms in other countries, with results that have implications for all nations' tax regimes. This process of reform is built on the premise that although legislation is one of the basic building blocks for compliance, it is far from sufficient. Tax law is contestable; it is also complex; and it is not beyond the initiative of taxpayers to avoid and evade tax in ways that are costly, both in terms of revenue that will never be collected and enforcement that is resource intensive. The traditional tax infrastructure of law, auditors, penalties, debt collectors, and court cases needs to be supplemented by measures that boost taxpayers' commitment to paying tax with or without the tax authority watching over their shoulders. At the heart of the reform strategies of the late 1990s was the building of a relationship with the Australian community in which the tax office was to be (a) professional, responsive, fair, open, and accountable in helping taxpayers comply with their tax obligations; as well as (b) effective in bringing to account those who intentionally avoided their obligations. Through adopting such practices, the intent was that the tax office earn (c) the trust, support and respect of the community (Australian Taxation Office, 1997). The first initiative toward building this relationship was the Taxpayers' Charter (Australian Taxation Office, 1997). The Charter articulated 12 rights of taxpayers and committed tax officers to treating taxpayers fairly and reasonably, to explain decisions, assist with questions, and provide reliable information, to respect taxpayer privacy, to keep the taxpayers' compliance costs to a minimum, and to be accountable, if necessary, through independent review. The taxpayers' obligations, articulated also in the Charter document, were four-fold and involved being truthful in dealings with the tax office, keeping records in accordance with the law, taking reasonable care in preparing tax information, and lodging tax returns and required documents by the due date. Bringing the Charter to life was no small challenge for the Australian Taxation Office. The traditional regulatory style of the ATO has been heavily weighted toward command and control with the automatic application of penalties for various forms of non-compliance (see Chapter 6). At the same time, the authority has not always used its prosecutorial powers effectively, with a history of slap-on- the-wrist prosecutions that rarely touch major evaders or avoiders (Grabosky and
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This study investigates whether paying higher wages motivates employees to provide higher effort and whether firm profit moderates this relation. Consistent with gift exchange (Akerlof 1982) and reciprocity (Rabin 1993) models, my experimental results show that workers provided more effort when they were paid higher wages even though there was no ex post financial reward for doing so. Moreover, firm profit influenced the relation between wages and effort. Workers provided higher effort when firm profit decreased compared to when it increased. This suggests that the degree of reciprocity is affected by firm profit. However, workers' responded asymmetrically to firm profit, in that they behaved as if they expected to share in firm profit increases but not decreases. Although firms were fairly adept at predicting the profit-maximizing wage strategy, they apparently did not anticipate workers' reluctance to share in firm profit decreases.
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This paper explores one part of a 1994 Minnesota Department of Revenue field experiment designed to study the effectiveness of alternative enforcement strategies. Two letters containing different normative appeals were sent to two large groups of taxpayers; a control group received no letter. The impact of the letters on voluntary compliance is measured by comparing the change (for tax years 1994-93) in reported income and in taxes paid for treated versus control taxpayers (a difference-in-difference approach). We find little evidence of an overall treatment effect. However, the letters do appear to impact the compliance behavior of some groups of taxpayers.
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This paper sets out a framework for analyzing optimal interventions by a tax administration, one that parallels and can be closely integrated with established frameworks for thinking about optimal tax policy. Its key contribution is the development of a summary measure of the impact of administrative interventions—the “enforcement elasticity of tax revenue”—that is a sufficient statistic for the behavioral response to such interventions, much as the elasticity of taxable income serves as a sufficient statistic for the response to tax rates. Among the applications are characterizations of the optimal balance between policy and administrative measures, and of the optimal compliance gap.
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This study reports the results of three experiments that examine how preferences for wealth and honesty affect managerial reporting. We find that subjects often sacrifice wealth to make honest or partially honest reports, and they generally do not lie more as the payoff to lying increases. We also find less honesty under a contract that provides a smaller share of the total surplus to the manager than under one that provides a larger share, suggesting that the extent of honesty may depend on how the surplus is divided between the manager and the firm. The optimal agency contract yields more firm profit than a contract that relies exclusively on honest reporting. However, a modified version of the optimal agency contract, which makes use of subjects' preferences for honest reporting, yields the highest firm profit. These results suggest that firms may be able to design more profitable employment contracts than those identified by conventional economic analysis.
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Tax practitioners often represent clients before the Internal Revenue Service (IRS). It is generally assumed that clients enjoy significant benefits when represented by a tax practitioner during an IRS audit, such as limitations on the final assessment of tax and penalties. To the best of our knowledge, there is no research that directly analyzes the impact of taxpayer representation on IRS audit outcomes because there is no data on whether the taxpayer was represented. This research provides empirical evidence regarding one of the perceived benefits of representation—a reduction in the final tax assessment by the IRS—and is a first step in determining when an individual should hire a professional representative for an IRS office audit. The results indicate that the final tax assessment is significantly less for taxpayers with representation during an IRS office audit, both in dollars and as a percentage of the potential deficiency.
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In an influential article, Schwartz and Orleans (1967) reported that emphasizing normative obligations to obey the law had a greater positive impact on tax compliance than did emphasizing deterrence factors. In this article, we report the results of a conceptual replication of that earlier experiment, within the context of a dynamic model of tax schema change. Prior to filing the 1987 tax year return (the first affected by the 1986 Tax Reform Act, TRA), taxpayers viewed one of two videotapes, one emphasizing the social consequences of the TRA and normative duties, the other emphasizing the personal consequences of the TRA and strategies to reduce tax liability. A control group of taxpayers did not receive information about the TRA. Data on attitudes, beliefs, and self-reported compliance were collected at three points during the tax season. Tax return data from the IRS were also obtained. The results indicate that the normative and personal consequences messages had predictable and persistent effects on tax-specific attitudes. However, these effects did not translate into changes in basic values or compliance, as reflected by either the self-report or the official tax return data. Possible explanations for the discrepancy between the results reported by Schwartz and Orleans (1967) and this experiment are considered.
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Synopsis: This study analyzes a random selection of Internal Revenue Service (IRS) office audits from October 1997 to July 1998, the type of audit that concerns most taxpayers. Taxpayers engage paid preparers in order to avoid this type of audit and to avoid any resulting tax adjustments. The study examines whether there are more audit adjustments and penalty assessments on tax returns with paid-preparer assistance than on tax returns without paid-preparer assistance. By comparing the frequency of adjustments on IRS office audits, the study finds that there are significantly fewer tax adjustments on paid-preparer returns than on self-prepared returns. Moreover, CPA-prepared returns resulted in fewer audit adjustments than non CPA-prepared returns.
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This study summarizes an IRS database that includes over 500 Customer Satisfaction Surveys (CSS) from individual taxpayers who were field audited in 1998. Descriptive statistics are provided indicating that most taxpayers were satisfied with the audit process. Most questions on the IRS survey were associated with overall audit attitude. Two variables affecting audit attitudes were additional tax assessments and use of a paid preparer. Those owing additional taxes as a result of the audit were more likely to have a negative attitude toward the audit process. Those using a paid preparer also tended to have a more negative attitude. The paper discusses reasons why those with preparer assistance were more disappointed (e.g. IRS examiner was not knowledgeable, audit took too long, and the audit outcome was worse than expected).
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The abstract for this document is available on CSA Illumina.To view the Abstract, click the Abstract button above the document title.
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How do people form beliefs about sanctions and norms toward the legal system? Using data from a telephone survey with 1,200 Minnesota adult residents, we examine how income sources that provide an opportunity to avoid official detection shape the amount and sources of communication about IRS enforcement effectiveness. Individuals with economic exchanges that provide the opportunity to cheat without detection received significantly more information about tax issues and IRS enforcement, especially from co-workers. Although both family members and co-workers were major sources of tax information, individuals received more information about IRS enforcement effectiveness from co-workers than from family members. Communication with co-workers lowered the perceived likelihood of IRS detections for overstating deductions, lowered the perceived severity of informal sanctions for tax cheatings, and lowered the perceived fairness of tax laws and positive personal norms toward compliance with tax laws. In contrast, communication with family members enhanced the perceived fairness of tax laws and positive personal norms toward compliance with tax laws. These findings are interpreted in the framework of social comparison theory (Festinger, 1954). We discuss implications for the theory and research on the development of beliefs about enforcement systems and compliance with laws.
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This study reports the results of three experiments that examine how preferences for wealth and honesty affect managerial reporting. We find that subjects often sacrifice wealth to make honest or partially honest reports, and they generally do not lie more as the payoff to lying increases. We also find less honesty under a contract that provides a smaller share of the total surplus to the manager than under one that provides a larger share, suggesting that the extent of honesty may depend on how the surplus is divided between the manager and the firm. The optimal agency contract yields more firm profit than a contract that relies exclusively on honest reporting. However, a modified version of the optimal agency contract, which makes use of subjects' preferences for honest reporting, yields the highest firm profit. These results suggest that firms may be able to design more profitable employment contracts than those identified by conventional economic analysis.
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Some evidence suggests that certain taxpayers might increase their “voluntary” compliance with the tax laws if presented with the right “moral appeals.” If such appeals were relatively inexpensive, compared to hiring more auditors, say, even small improvements in compliance would justify such efforts. However, would such appeals be “justified” in some philosophical, as opposed to economic or psychological, sense? The moral grounds for voluntary cooperation with the tax collection agency turn out, on close scrutiny, to be surprisingly narrow. Though firm, these moral grounds also contain– arguably, at least–one important exception.
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A statewide telephone survey was used to obtain data on self-reports of hypothetical prize income. One-third of the subjects were read a moral argument, one-third were read information on the level of taxes paid by the “wealthy,” and one-third of the subjects were treated as the control group. Both the moral and the wealthy-pay arguments increased compliance for some of the subjects. There was no apparent backlash effect from the moral argument as suggested by Tittle and Rowe (1973). The wealthy-pay strategy was effective for taxpayers with tax balances due rather than for those receiving tax refunds. The study also provides evidence on how college education moderates the effects of tax balances due as well as evidence on how a moral argument can negate the noncompliance effects of tax balances due.
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Accounting involves assigning numbers to events — quantifying them. Conventional wisdom holds that putting numbers to an argument enhances its persuasive power. There is, however, little scholarly evidence to support or refute this claim, in accounting or elsewhere. In this paper, we develop an original process-based model of how quantification influences persuasion. We posit that including a high-quality quantified analysis in a proposal enhances its persuasive power by increasing both the perceived competence of the proposal preparer and the perceived plausibility that a favorable outcome could occur. Under some conditions, however, quantification also encourages criticism of the details of the proposal, which potentially offsets these effects. We experimentally test implications of our model in a managerial decision setting, investigating conditions in which quantification is more and less likely to result in criticism of the quantified proposal and, thus, less and more likely to be persuasive. We also test the model itself using structural equations methods. Results largely support the model, which should prove of value to researchers interested in the effects of quantification on judgements and to those interested in persuasion.
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Noncompliant taxpayers have better attitudes toward the tax administration and toward honest tax reporting when they receive information about free taxpayer services by the government rather than information about taxpayer penalties. Given that the government has repeatedly relied on penalties to deter taxpayer noncompliance and given that noncompliance continues to be a multibillion dollar problem, positive attitudes are associated with awareness of free taxpayer services.
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This paper assesses the influence of tax preparers on tax compliance. Using data from the Internal Revenue Service's (IRS) Taxpayer Compliance Measurement Program and an index of legal ambiguity based on Revenue Rulings, the impact of preparation mode (paid third party vs. self) on compliance at the level of the return line item is probed. The results suggest that preparers contribute to compliance by enforcing legally clear requirements but also contribute to noncompliance, as measured by the IRS, by helping taxpayers take advantage of legal ambiguity. Furthermore, an analysis of a campaign to enforce estimated tax requirements conducted by the Pennsylvania Department of Revenue suggests that tax preparers are also an important network for communicating tax agency enforcement priorities to taxpayers.
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In 1995 a group of 1724 randomly selected Minnesota taxpayers was informed by letter that the returns they were about to file would be ‘closely examined’. Compared to a control group that did not receive this letter, low and middle-income taxpayers in the treatment group on average increased tax payments compared to the previous year, which we interpret as indicating the presence of noncompliance. The effect was much stronger for those with more opportunity to evade; in fact, the difference in differences is not statistically significant for those who do not have self-employment or farm income, and do not pay estimated tax. Surprisingly, however, the reported tax liability of the high income treatment group fell sharply relative to the control group.
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In this paper a framework is developed for the joint analysis of tax preparation mode and tax non-compliance. Estimation is performed using micro-level audit data from the Internal Revenue Service. Although tha availability of tax practitioners undoubtedly reduces many of the informational and computational barriers to tax compliance, the results indicate that their use, particularly the use of CPAs and attorneys, is associated with increased tax non-compliance, which may have negative implications for both tax equity and tax efficiency.
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Thesis (Ph. D.)--Arizona State University, 1990. Vita. Includes bibliographical references (leaves [54]-57).
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Both thallium 201 and technetium 99m sestamibi have been used to quantitate infarct size at rest. Exercise 201Tl scintigraphy has been shown to have powerful prognostic information after myocardial infarction. A single study using these agents that could provide data on infarct size and prognosis would be of value. The purpose of this study was to compare estimates of infarct size by use of 201Tl and 99mTc sestamibi and to correlate these measurements with left ventricular ejection fraction in patients after acute myocardial infarction. The study group consisted of 20 patients who underwent low-level 201Tl stress studies with reinjection and 99mTc sestamibi resting studies within 4 days. Acute reperfusion was attempted in 18 of 20 patients. For 99mTc sestamibi tomographic imaging, infarct size was quantitated with 60% of maximal counts per slice for five short-axis slices as described in multiple previous studies. The postreinjection delayed 201Tl images acquired 4 hours after stress were quantitated according to the same threshold method. 201Tl patient images were also quantitated with a commercially available polar map program and compared with sex-matched control subjects. Ejection fraction was determined for each patient by radionuclide ventriculography 6 weeks later. Ejection fraction was well preserved for the group: mean 0.53 +/- 0.10. Infarct size with 99mTc sestamibi was 12% +/- 13% of the left ventricle, which was significantly smaller than either method with 201Tl: threshold method, 29% +/- 18% of left ventricle; polar map method, 25% +/- 17% of left ventricle (both 201Tl estimates, p < 0.0001 vs 99mTc sestamibi; 201Tl, 70% threshold vs 201Tl polar map, p = 0.04). There was a significant correlation between infarct size with 99mTc sestamibi and that with 201Tl (r = 0.72 to 0.73; p < 0.001). Infarct size with 99mTc sestamibi, however, provided the closest correlation with ejection fraction (r = 0.81; p < 0.001), with the two 201Tl quantitative methods providing very similar correlations (r = 0.69; p < 0.001). Infarct size with reinjection 201Tl imaging correlates significantly with resting infarct size with 99mTc sestamibi, although it provides significantly larger estimates. Although both approaches can be combined with a same-day exercise protocol, the closer correlation of infarct size with ejection fraction at 6 weeks suggests that resting infarct size with 99mTc sestamibi may be slightly more accurate.
Reciprocity and fairness: Positive incentives for tax compliance Listening to different voices: Formation of sanction beliefs and taxpaying norms
  • Washington
  • Dc
Washington, DC: Brookings Institution Press. Smith, K. 1992. Reciprocity and fairness: Positive incentives for tax compliance. In Why People Pay Taxes: Tax Compliance and Enforcement, ed. J. Slemrod, 223–57. Ann Arbor, MI: University of Michigan Press. Stalans, L., K. Kinsey, and K. Smith. 1991. Listening to different voices: Formation of sanction beliefs and taxpaying norms. Journal of Applied Social Psychology 21 (2): 119–38.
Tax preparers: Whose team are they on
  • Brody
Brody, R., and J. Masselli. 1996. Tax preparers: Whose team are they on? National Public Accountant 41 (3): 18-46.
Taxing Democracy: Understanding Tax Avoidance and Evasion
  • V. Braithwaite
The relation between the use of tax preparers and taxpayers' prepayment position
  • C Christian
  • S Gupta
  • G Webber
  • E Willis
Christian, C., S. Gupta, G. Webber, and E. Willis. 1994. The relation between the use of tax preparers and taxpayers' prepayment position. Journal of the American Taxation Association 16 (1): 17-40.
The economics of taxation
  • S James
  • C Nobes
James, S., and C. Nobes. 2003. The economics of taxation. Harlow, UK: Prentice Hall.
Tax preparers: Government agents or client advocates
  • Jackson
Jackson, B., and V. Milliron. 1989. Tax preparers: Government agents or client advocates? Journal of Accountancy 167 (5): 77-82.
Taxpayer Compliance: Volume 2, Social Science Perspectives
  • R. Kidder
  • C. McEwen
Lawyers on Psychology and Psychologists on Law
  • K. McGraw
  • J. Scholz