The Norwegian Tax Administration operated multi-year random audits of personal income tax returns. We exploit this exceptional randomized setup to estimate the effects of tax audits on future compliance explicitly distinguishing between dynamic responses of compliant and noncompliant audited...

According to the canonical model of Allingham and Sandmo (1972), firms evade taxes by making a trade-off between a lower tax burden and higher expected penalties. However, there is still no consensus about whether real-world firms operate in this rational way. We conducted a large-scale field...

Reducing tax evasion is a key priority for many governments, particularly in developing countries. A growing literature has argued that the ability to verify taxpayer self-reports against reports from third parties is critical for modern tax enforcement and the growth of state capacity. However,...

The canonical model of Allingham and Sandmo (1972) predicts that firms evade taxes by optimally trading off between the costs and benefits of evasion. However, there is no direct evidence that firms react to audits in this way. We conducted a large-scale field experiment in collaboration with...

Tax audits are a necessary component of the tax system but have potentially adverse real effects on firms selected for audit. This paper examines the real effects on small firms of being subjected to a tax audit, using administrative data from both random and nonrandom tax audits. We find that...

This study examines the effect of tax aggressiveness and voluntary audit of the financial statements on the likelihood of tax adjustments in small private companies. We provide evidence that (1) tax aggressiveness increases the likelihood of the tax authority not accepting taxable income as...

We study the extent to which ML techniques can be used to improve tax auditing efficiency using administrative data, without the need of randomized audits. Using Italy's population data on sole proprietorship tax returns, audits and their outcome, we develop a new approach to address the so...