This paper studies the effect of endogenous audit probabilities on reporting behavior in a face-to-face compliance situation such as at customs. In an experimental setting in which underreporting has a higher expected payoff than truthful reporting we find an increase in compliance of about 80%...

The IRS Audit Techniques Guides (ATGs) focus on developing highly trained examiners for a particular market segment or issue. A market segment may be an industry such as construction or entertainment, a profession like attorneys or real estate agents or an issue like passive activity losses,...

Tax administrations use machine learning to predict risk scores as a basis for selecting individual taxpayers for audit. Audits detect noncompliance immediately, but may also alter future filing behavior. This analysis is the first to estimate compliance effects of audits among high-risk wage...

This study uses a confidential dataset of firms assigned to the Internal Revenue Service (IRS)'s Coordinated Industry Case (CIC) program to examine the effect of audit certainty on firms' tax reporting behavior. We first model the determinants of assignment to the program. Though the ability and...

We employed a game-theoretic framework to formulate and analyze a number of tax audit rules, especially the lowest income reporter audited rule. We explicitly considered the auditor's resource constraint to choose one target from a continuous type of taxpayer. We then tested the theoretical...

The effects of taxes have been discussed in almost every decision context in the extant literature, but the relationship between taxes and auditing has amazingly merited little attention. We explore the relationship between audit effort, audit quality and taxes from the perspective of both...