A Structural Equation Model for Tax Compliance and Auditing / Kurt J. Beron, Helen V. Tauchen, Ann Dryden Witte.

Format:

Book

Author/Creator:

Beron, Kurt J.

Contributor:

National Bureau of Economic Research.

Tauchen, Helen V.

Witte, Ann Dryden.

Series:

Working Paper Series (National Bureau of Economic Research) no. w2556.

NBER working paper series no. w2556

Language:

English

Subjects (All):

Tax auditing--United States.

Tax auditing.

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1988.

Cambridge, Mass. : National Bureau of Economic Research, 1988.

Summary:

In this paper. we estimate a three equation model for taxpayers' reported income and tax liability and for the probability of an audit. Our work differs from previous studies in that our dependent variables in the compliance equations are taxpayer reports rather than a variable related to auditor estimates of noncompliance and in that we estimate a structural equation for audits. We find that audits stimulate compliance although the effect is not large and is not statistically significant for all groups. Audits are more effective at inducing accurate reporting of subtractions from income than of income. Reduced-form results suggest that IRS activities other than audits have significant compliance effects. Results for the sociodemographic variables are interesting and help to explain some seemingly incongruous findings in the literature. We find compliance to be higher, if anything. in areas with less educated and older taxpayers, a large proportion of households headed by females. and a mostly native born population.

Notes:

Print version record

April 1988.